Uchumi shareholders agree to raise Sh1.2b

July 28, 2009
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, NAIROBI, Kenya, Jul 28 – The Uchumi chain of supermarkets on Tuesday received the go-ahead from its shareholders to raise Sh1.2 billion through a new debenture issue.

Uchumi Supermarkets Receiver Manager Jonathan Ciano said the supermarket chain is targeting to raise between Sh470 million and Sh1.2 billion to allow it to re-list on the Nairobi Stock Exchange (NSE).

“Any number that comes beyond Sh470 million will make me a very proud boy. If I get Sh1.2 billion I will be extraordinarily exhilarated and say yes! We are there,” Mr Ciano said.

Speaking after a special shareholders meeting Mr Ciano explained that Sh1.2 billion is the amount required to clear debts owed to the government, PTA and KCB banks.

He however explained that the negative shareholder fund is only Sh470 million and so if shareholders raise the amount they would get the company out of its ‘technical insolvency status’.

“It will be very unfortunate for anyone who is able to take up this debenture not to, because what that simply means is that it will take longer for the company to go back to the stock market which makes the shareholder the sufferer,” he said.

Mr Ciano said valuation of the chain is currently ongoing and should be complete by mid-August in preparation for the debenture issue.

“The company aims to raise the funds between early August and October 31,” Mr Ciano said.

Procedure for the debenture issue would be like in the two previous ones with a shareholder being allowed to take a minimum of Sh3,000 at an interest rate of 10 percent per annum.

However, considering that Uchumi Supermarkets has in the past two attempts not been able to raise the Sh300 million it is targeted, Mr Ciano needed to explain what his other options would be if this was the case again.

The Receiver Manager listed other options including asking the government and the two banks to convert the debts into equity while another is to take on a strategic partner.

This becomes the third attempt by the chain to clean up its books in order to re-list on the NSE.

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