Uchumi Supermarket has opened talks with its suppliers that could see the creditors convert the debts owed to them by the retailer into shares.
The creditors Tuesday agreed to oppose an ongoing insolvency case against Uchumi filed by five suppliers. The retailer hopes the conversion will ease the debt load on its books.
“We have agreed to have the debt restructured as we are opposed to winding up. We have given a mandate to our lawyers to append our names in opposing the (winding up) petition because everyone will be a loser. We can bring it (Uchumi) back like we did previously,” said the Association of Kenya Suppliers chairman Kimani Rugendo.
Imports and supply firm Ceccagnoli Italiano Ltd has filed a petition to wind up Uchumi over its debt, a suit that has attracted Kenblest Group, Githunguri Dairy, Star Times and Nairobi Bottlers who are claiming a combined Sh315 million from the retail chain. The case will be heard on Thursday.
Uchumi’s total liabilities have surpassed its assets by nearly Sh200 million, putting the firm in a negative equity position.
The retailer’s debt load of Sh6.3 billion against a total asset base of Sh6.1 billion has crystallised into a negative equity of Sh181.8 million, or Sh0.49 per share as per half-year financial statements to December.
Uchumi owes suppliers Sh3.6 billion with another Sh2.5 billion debt held by banks with charged assets.
The supermarket’s CEO Julius Kipng’etich said that the suppliers stand to lose most if they close Uchumi.
Uchumi in Uganda
Uchumi owes more than a dozen creditors in Uganda including Crown Beverages Ltd, Century Bottling Co. Ltd, Samona Products, Zebu Emporium Limited, Ugachick, Trinity Textiles Uganda Limited, while a number of landlords are seeking their rent dues.
Uchumi closed operations in its Uganda and Tanzania subsidiaries last year and later filed a bankruptcy petition seeking to wind up business so as to safeguard its remaining assets from creditors, rendering about 400 people jobless.
Uchumi operated a chain of outlets in the country in Kampala, Gulu and Mbale.