Uchumi settles Government debt, plans a rights issue

The company will be seeking KES 1bn from existing shareholders next month to finance a regional expansion program

Uchumi Supermarkets Ltd. has settled a KES 407mn debt owed to the Government by paying a final installment of KES 33.3mn.

Chief Executive Jonathan Ciano presented a cheque to Finance Secretary Henry Rotich at the treasury Thursday, loaned to the retailer at the height of insolvency in 2006.

Dr. Ciano then announced Uchumi will be looking to raise KES 1bn from its existing shareholders next month to fund a regional expansion program involving branch expansion and refurbishment of existing ones.

“The money will partly finance our 7-year growth and expansion programme that will cost KES 2bn,” he said. The company has already secured KES 1bn through asset financing and loans from commercial banks.

Mr. Rotich confirmed the state’s interest in the rights issue. The government holds a 13.4pc stake and will inject an additional KES 264mn through the issue.

“We are ready and committed for the rights issue,” Mr. Rotich said at his treasury offices where he also received dividend cheques of KES 17.3mn and KES 252mn respectively from the Postal Corporation of Kenya and Kenya Re-insurance Corporation.

The planned rights issue will be Uchumi’s second, with the company set to offer 100 million new shares to existing shareholders. The first was in 2005, which was oversubscribed by 6pc after selling 120 million shares at KES 10.

The presentation of the final installment marked one of the highlight of a nine-year turnaround period which has seen the company not only re-admitted to the Nairobi Securities Exchange but also cross list on the Dar es Salaam and Rwanda Stock Exchanges as well as the Uganda Securities Exchange.

The company closed its stores in 2006 after incurring a KES 1.2bn loss in 2005, which resulted in the firm owing its suppliers and commercial banks a KES 2bn debt.