The offer is on the basis of three for every eight ordinary shares held on October 22, 2014 with eligible shareholders who do not wish to take up or be part of their new share having an option to abandon, sell or transfer their rights to a third party.
The register closure date will be on October 22, with trading of the rights on Nairobi Securities Exchange set between November 10, 2014 and November 28, 2014.
According to the retailer, the government has issued a written commitment confirming that it will take up its full entitlement in the Rights Issue representing 13.8 percent of the transaction.
The funds will partly finance the retail chain’s seven year growth and expansion programme that will cost Sh2 billion. The company has already secured the remaining Sh1.2 billion through asset financing and loans from commercial banks.
The funds will be used to open new branches as well as refurbish local branches.
The company has picked Faida Investment Bank as lead transaction adviser, Equity Bank as sponsoring broker, Hamilton Harris & Matthew Advocates as legal adviser, Ernst & Young as auditor, ICDC as the share registrar, and Hill + Knowlton Strategies as public relations and advertising consultant.
The issue opens on November 10, 2014 and closes on November 28.
“We however remained concerned about the retailer’s operational efficiency as well as aggressiveness in the market which has seen it return the lowest revenues per store among large retailers such as Nakumatt, Tuskys and Naivas. Furthermore, the retailer has been lagging behind its competitors in terms of taking up opportunities in lucrative market segments. As a result, we believe the rights issue will assist the retailer to play catch-up with the market rather than create a competitive advantage,” commented Standard Investment Bank Research on the rights issue.
Last Month, the retail chain paid the Treasury Sh33 million, the final payment of the Sh627 million loan it owed the government. The loan was given to Uchumi for the purpose of reviving the company that had been declared insolvent and closed its doors for 45 days in July 2006.
Last year, the company successfully cross-listed on the Rwanda Stock Exchange on 14th October 2013 and the Uganda Securities Exchange on the November 13, 2013.