NAIROBI, Kenya, Apr 28 – The Capital Markets Authority (CMA) on Thursday approved the lifting of the suspension of Uchumi from listing on the Nairobi Stock Exchange (NSE).
The announcement will come as welcome relief for the retail chain\’s shareholders, whose shares have been suspended from trading at the bourse since June 2006 following its collapse over accrued debts.
While confirming the approval, the CMA Chief Executive Officer Stella Kilonzo, said that the supermarket chain had satisfied the relevant provisions of the Capital Markets (Securities) (Public Offers, Listings, and Disclosures) Regulations 2002.
The regulatory authority however set out a number of requirements for Uchumi before its shares can resume trading at the stock exchange.
\’\’As part of enhancing corporate governance, Uchumi is required to appoint an independent chairman of the board within four months of the lifting of the suspension," Mrs Kilonzo said in a statement sent to newsrooms.
Mrs Kilonzo added: "The Uchumi Board of Directors is also required to provide an undertaking confirming that the properties listed in the Shareholders\’ Circular are duly owned by Uchumi and whether there are any encumbrances or claims from third parties except those that have been disclosed the company\’s most recent annual report and the Shareholders Circular in respect of this transaction.\’\’
Contacted soon after the lifting of the suspension, Uchumi Chief Executive Officer Jonathan Ciano said it had been a very tense and trying time for the supermarket as it was not easy convincing the CMA that they were in good books.
"Thank God the war has been won. We have received a lot of support from various stakeholders over the last year that has seen us go back to the NSE," Mr Ciano said.
He said he was looking forward to repaying Uchumi\’s estimated 19,000 shareholders for their patience by making the supermarket a regional retail powerhouse.
During its five-year hiatus from the bourse, Uchumi managed to issue an additional 86 million ordinary shares from conversion of debentures to equity offered to existing shareholders and suppliers, when the chain was searching for more capital to shake-off receivership.
This saw the shares increase from the 180 million shares it had when it was placed under receivership in 2006, to 266 million shares.
Mr Ciano however said that not all shares would be traded adding, "we need to accumulate funds that will be used to fund our growth both locally and in the region."
He was optimistic the shares would do well at the stock exchange given the \’demand and number of enquiries\’ that have been made.
At the time of its collapse, the company had announced a Sh1.2 billion annual loss, and had accumulated debts of up to Sh2 billion owed to suppliers and financiers KCB and PTA banks.
The supermarket chain has however been on the path to recovery posting consistent profits. Uchumi was also lifted out of receivership in March 2010 setting the stage for its re-listing at the stock exchange.
Uchumi was declared solvent after the government agreed to convert Sh350 million loan to the company into equity.
Uchumi first applied for the lifting of the suspension to CMA in April 2010.
Upon review of the initial application submitted it was noted that Uchumi did not meet the financial eligibility criteria for listing including the fact that the company had negative working capital for the preceding four financial years, was insolvent, and it did not have the required profitability track record of three years.
In an effort to protect shareholders from likely risks arising from company\’s lifting of the suspension, Mrs Kilonzo said the CMA required Uchumi\’s management to put in a place risk mitigation strategy, which includes sensitization of key shareholders and market intermediaries on the company fundamentals through stakeholder briefings before commencement of trading.
"Additionally, the Authority required undertakings from key shareholders that they would not sell their shares for a period of one year from the lifting of the suspension and re-listing," she said.
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