• Uchumi has been banking on selling the land to turn around its dwindling fortunes that have seen it sink in a Sh7.89 billion debt owed to the government, banks, and creditors.
• The 20-acre piece of land is currently at the center of a dispute between the Kenya Defence forces and the troubled retailer.
KCB Group is set to pocket the largest share of proceeds raised from the sale of Uchumi land.
Debt restructuring proposal by Uchumi shows that the lender will receive Sh900 million out of the Sh2.8 billion to be raised after the land sale.
This is despite the bank waiving and discounting Sh546.47 million from the total Sh1.45 billion outstanding balance.
The lump sum amount will be used to pay at least Sh672 million overdraft facility taken in two occasions and a Sh228 million lease.
At least 37.8 per cent or Sh1.06 billion of the proceed will be used on legal fees and commissions.
The 20-acre piece of land is currently at the center of a dispute between the Kenya Defence forces and the troubled retailer.
A drive through the highway shows that KDF has moved a number of infantry fighting machines, and full-time military officers manning the land.
However, in December last year, a customer identification report from Metropol Corporation Limited showed that the land has already been purchased by City Preacher Edward Mwai of Jesus Winner Ministry.
The report shows that Mwai and three other men of the cloth have through Jewel Complex Limited paid a Sh330 million deposit for the prime parcel.
However, the restructuring proposal records that the 44 years old retailer has entered into an agreement with Kasarani Mall Limited, to liquidate the piece of land in a bid to partially settle some of the debt.
This is in addition to injecting some liquidity into the business to finance working capital to enable the business achieve revenue growth and improve its cash flow position.
The property is expected to generate net proceeds of Sh1.74 billion.
Uchumi has been banking on selling the land to turn around its dwindling fortunes that have seen it sink in a Sh7.89 billion debt owed to the government, banks, and creditors.
At least Sh3.19 billion is owed to senior lenders- government and banks while Sh4.69 billion is owed to creditors.
Declining sales and rising amounts of debt have taken a toll on the retailer’s financial health thereby limiting its ability to continue operating effectively as a going concern.
Yesterday its creditors met and voted for the implementation of the proposals. At least 157 suppliers voted for compared to 81 suppliers who voted against.
Majority of (23) the shareholders also supported the proposal with only six rejecting it.
The company’s voluntary arrangement which forms part of the restructuring proposal shows that the payment to creditors will be spread in a five to 10-year repayment plan.
Besides paying proportion of the outstanding debt as a lump sum, the retailer seeks to get a waiver on all the outstanding penalties and interest arrears.
In the instance that creditors would have voted against the proposal, the retailer would be put under administration like Nakumatt, get a court-approved agreement with its shareholders on way forward or be liquidated.