Uchumi CEO hints at troubled supermarket receiving bailout
By Dominic Omondi | June 22nd 2016
Uchumi Supermarkets Chief Executive Julius Kipng’etich has hinted that the cash-strapped retail store may received a cash boost from the Government.
This comes at a time when the retailer is engaged in what is perhaps its fiercest fight for survival after a High Court ruling that paved way for its liquidation.
“The Government is backing us up. And you will see the Government cheque come soon,” a bullish Kipngetich told KTN in an interview yesterday.
In his budget speech to the national government, National Treasury Cabinet Secretary Henry Rotich reiterated the Government’s commitment to revive some of its strategic investments including Kenya Airways, Mumias Sugar and Telkom.
However, the CS was silent on Uchumi, which had already requested for Sh1.2 billion to settle part of the suppliers’ Sh3.6 billion debts. The money will be used to settle part of the retailer’s debts. Kipng’etich, who appeared unmoved by the current developments, assured his customers that in the next few weeks the hitherto empty shelves will be filled up as suppliers resume their deliveries. Uchumi has already appealed against the High Court ruling and is expected to contest the court’s reliance on the harsher old Companies Act.
Unlike the old statute, which allows for express liquidation of a company that has lost a winding-up petition, the new Companies Act would have allowed them to negotiate for repayment with the aggrieved party.
“Take notice that the respondent, Uchumi Supermarkets Ltd, being dissatisfied with the ruling of Honourable Lady Justice Farah Amin given at Nairobi High Court, Commercial and Admiralty division on the 17th day of June 2016 intends to appeal to the court of appeal against the whole of the said decision,” said Uchumi in court papers filed at the High Court on Monday. The news of the court’s decision hit the NSE-listed retail store hard, with its share price hitting an all-time low of Sh2.90 by the close of business on Monday.
With a total of 300 million shares, it means Uchumi investors have lost a whopping Sh6.03 billion in paper value.
Kipng’etich said already, money had started flowing into an escrow account opened and operated by both suppliers and the Uchumi management as a security measure.
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