It will be irresponsible for us to quit now, Uchumi bosses say
By Wainaina Wambu | March 10th 2020
At the intense seven-hour annual general meeting (AGM) that saw Uchumi survive liquidation last week, Catherine Kamuri was asked to start the function with a “word” of prayer.
Ms Kamuri had been Uchumi’s supplier for 15 years and was one of the creditors who would come to cast their vote.
In a fiery prayer, Ms Kamuri sought God’s wrath on those who mishandled funds or were responsible for the fall of the retail giant.
Prayers are all the estimated 3,000 suppliers owed almost Sh5 billion by Uchumi can rely on.
Majority of them are individuals and old whose lives have been ruined by the fall of the retail chain. Some had taken bank loans and were auctioned due to defaults. They are the unsecured creditors and had Uchumi been wound up, they would have walked home with empty pockets.
Under the Company Voluntary Agreement (CVA) that seeks to restructure Uchumi debts and lay out a path to improving the retailer’s liquidity, the unsecured creditors will take a 30 per cent haircut.
In its new operational model, Uchumi is paying suppliers weekly.
“We don’t want to over-commit because we are coming from a background of not fulfilling promises,” said Uchumi Chief Executive Mohamed Mohamed.
He observed that suppliers, especially the small ones, were the reason he got out of bed in the morning, having seen them cry in AGMs.
“Those tears have touched my heart, so I just asked them to pray for me to be able to live up to their expectations,” he said.
The suppliers will be paid Sh1.4 billion over six years on an annual basis, Sh1.4 billion discount and the rest Sh1.9 billion will be turned into noncumulative convertible preferred shares.
Strangely, the bigger suppliers didn’t care about the future of Uchumi and were comfortable with whatever decision. Uchumi Chairman John Karani spoke about how the job was taking a toll on the retail giant’s management. At some point, together with Uchumi Mr Mohamed, they had almost quit.
He says that taking up the job had been an agonising decision.
“I was very reluctant to take up this role as chairman of Uchumi. I have had a career of over 30 years in the blue-chip companies. I asked myself; should I really risk that with a brand that has been wounded … but I decided to take up that challenge,” he told creditors last week.
He said as management, they had made lots of sacrifices and sympathised with the employees. “I’m tired. We are all tired, but it would be irresponsible of us to quit,” he said.
Mr Karani said with the CVA, the brand would have “one more chance”. “When I see it (Uchumi) back, I will finally say that I’ve fought the good fight,” said Karani.
At one point, Uchumi which was established in 1975 held the aspirations of millions of Kenyans.
It was the first local and non-family run retailer to be listed in the region in 1992 and had expanded to Uganda and Tanzania.
Poor internal controls, inappropriate business model and management information system were some of the factors blamed for its collapse.
To return to a profit-making path, Uchumi hopes it can sell a Sh2.8 billion piece of land in Kasarani and a looming deal with a strategic investor will help it recapitalise.
However, the supermarket is currently locked in a battle over the land with the army and the matter is at the Attorney General’s office.
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