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Kenya

Kenyan supermarket chain out of the red

NAIROBI, Kenya Dec 8 – Retail outlet Uchumi Supermarkets Limited says it expects to be out of technical insolvency by January 2010 setting the stage for ending its three-year receivership status.

Uchumi Receiver Manager Jonathan Ciano told a news conference on Tuesday the supermarket chain had raised enough revenue to pay off debts that saw it placed under receivership in 2006.

This is also expected to pave way for the re-listing of its shares on the Nairobi Stock Exchange, which has since been suspended.

Over zealous expansion plans in the early after the year 2000 saw it run up huge debts that precipitated the technical insolvency. It owed two banks (Kenya Commercial Bank and PTA Bank) Sh957 million in secured debts and Sh900 million to its suppliers and landlords.

Mr Ciano however expressed optimism the loans would be cleared by the end of December.

“The secured debt to the banks together with the interest equal to Sh979 million and will have been cleared by mid December 2009,” he said.

The Receiver Manager also revealed Uchumi had cleared paying Sh900 million owed to creditors and with a further Sh708 million to landlords.

The total debt and interest settled during the period under receivership was Sh1.68 billion.

He said the expected total closing loan balance to banks as at end of December to be Sh130 million.

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Uchumi almost collapsed under a Sh2.2 billion debt and had to implement a rescue plan in 2006 which has since seen it return to profitable ways.

In the three months to September 2009, it recorded a profit of Sh50 million and the amount is expected to increase significantly in the coming years.

Mr Ciano was speaking while announcing that the company’s debenture issue had raised Sh70 million. This brings the total amount raised through three debentures to Sh207 million.

He said he would be approaching the government and the banks to seek a favourable way forward as approved by shareholders.

Negotiations with the government will revolve around requesting either part or total conversion in to equity of its Sh676 million loan in an effort of improving the company’s equity base.

Once receivership is lifted, Mr Ciano said he would be calling for a shareholders meeting to discuss the conversion of the debentures to shares that would see them take over the running of the company.

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