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Uchumi heading out of receivership

NAIROBI, Kenya, Jan 29 – Uchumi Supermarkets is finally set to emerge from receivership on Monday, February 1 which will pave way for the chain’s shares re-listing on the stock market.

The development followed an Annual General Meeting (AGM) on Friday during which shareholders authorised the Board of Directors to convert shareholders’ and suppliers’ debenture loans amounting to Sh477 million into ordinary shares.

Receiver Manager Jonathan Ciano said its creditors – the Kenya Commercial Bank and the PTA Bank – would now be expected to formally write to the Capital Markets Authority (CMA) to get the chain out of insolvency.

“There is something we call ‘cessation of receivership’ that will be launched by the banks giving indication that they have already given us the approval,” he said adding that they the banks had already sent them a letter consenting to the lifting.

When the chain was closed in May 2006, Uchumi owed the two banks Sh957 million. It has however managed to settle most of the debt, reducing it to Sh130 million as at December 2009.

Uchumi now owes Sh70 million and Sh60 million to KCB and PTA Bank respectively.Mr Ciano assured that this loan would be paid within 12 months.

The supermarket has been on a profit making streak since 2007 and it’s currently receiving an estimated 18 million customers per annum and has recorded a profit of over Sh500 million in the last two years. It expects to record a profit of Sh1 billion by 2011 and an estimated 20 million customers over the same period.

The shareholders also approved the proposal to have part of the Sh857 million worth of government loan and interests accrued converted to equity with the other portion is restructured into a four year term loan.

“We have told the government to consider converting Sh350 million into shares and we will them give it some money and the balance of Sh400 million is converted into term loan; if that is done, we shall be home and dry,” he enthused.

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Mr Ciano has in the past said they are ready to give the government Sh100 million as a down payment for the loan.

Once the conversion exercise is completed, the chain’s shares will go up from 180 million to 262.5 million with the government holding a 13.3 percent stake.

Solicitor General Wanjuki Muchemi expressed the government’s keenness to have the Sh400 million converted into a restructured term loan.

“The government has mid-wifed this baby and we are saying that we are going to walk hand in hand with Uchumi,” he said.

While lauding the receiver manager for steering the chain into profitability, Mr Muchemi said the government was considering the receivership and company’s laws in the next few years to give guidelines on how the exercise should be conducted in the future.

He pointed out that unlike Uchumi, other companies that have been put under receivership in the past had instead gone down completely and the reviewed laws would address this aspect.

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