NAIROBI, Kenya, Dec 30 – Retail Chain Uchumi Supermarkets has said that it expects to be lifted out of receivership in February next year.
Receiver Manager Jonathan Ciano told reporters on Wednesday that they had set up an Annual General Meeting (AGM) in January where shareholders will be expected to pass resolutions which would then be deliberated upon by the Board of Directors.
“On February 1 we expect the board to be in charge. The lifting can be done anytime in January but I requested the bankers to hold it until some corporate governance or continuing obligations are met,” he said in reference to partly setting up of the audit, strategy committees that need to be in place before the process is completed.
A 21 day notice had to be given before the AGM where some of the resolutions to be approved include the appointment of auditors.
Uchumi was placed under receivership in May 2006 after it failed to pay debts worth Sh957 million owed to the Kenya Commercial Bank and the PTA Bank. As at December 2009 however, this debt had been reduced to Sh133 million prompting the banks to consent to getting the chain out of receivership.
Mr Ciano said that in the January 29 meeting, shareholders would also be expected to approve the conversion of suppliers’ and shareholders debentures worth Sh477 million into equity.
The chain has been in talks with its creditors to meet its debt obligations since early this month after it failed to raise the targeted Sh1.2 billion in its third debenture issue, only managing a paltry Sh70 million.
The Receiver Manager said the government has indicated its willingness to consider converting some of its debt to Uchumi and offload the shares to the public.
Although he declined to divulge any further details saying they were still been worked out, the manager said some of the money the government put in for the chain’s recovery plan will be partly converted into a restructured term loan.
“I don’t want to disclose this because it is still very green but we have said that if you can give us ‘A’ number of shillings into term loan of four or five years, we are ready to give the government Sh100 million as a down payment, then the other portion can come in as shares,” he explained.
He expressed confidence that many investors will buy into Uchumi once the shares are put up for sale owing to the good profitability track record exhibited by the chain in the last three years.
The supermarket, which is currently receiving an estimated 18 million customers per annum, has recorded a profit of over Sh500 million in the last two years and expects to register a similar figure this year.
Once all this is done, the chain will be looking to the Capital Markets Authority to give it the green light to re-list its shares on the Nairobi Stock Market. Mr Ciano declined to speculate on when this might happen.
“All I can say is that if we have operated within the precepts of the laws and the regulations of the CMA expect the lack of board, then it will be a matter of time,” he said.
At the same time, Mr Ciano said plans to expand into the region are still on course. They expect to venture into Tanzania early next year and have already approached developers there.