It will be hard for local retailer Uchumi Supermarket to survive if the Collective Bargaining Agreements (CBA) will not materialise, chief executive Mohamed Mohamed has said.
In an exclusive interview with the Star yesterday, Mohamed who was tapped to manage the troubled retailer in December 2017 following resignation of Julius Kipng'etich however exuded confidence that talks will bear fruits.
''All unsecured and some secured creditors have agreed to the plan. We are in talks with few who are objecting. It will be hard for Uchumi to recover if talks fails,'' Mohamed.
In March, Uchumi Supermarket filed a creditors plan at the High Court outlining the measures the troubled retailer intended to take towards reducing its debt as well as spelling out initiatives towards restocking its branches.
It gave suppliers and bankers creditors two stark choices; either take 30 per cent of what the retailer owes them – and give up an estimated Sh2.5 billion in debts owed to them – or, failing that, be prepared to lose all their money.
Secured creditors who includes KCB Bank, United Bank for Africa, Co-operative Bank and ICDC rejected the debt restructuring proposal and creditors’ plan presented by the retailer, saying it should just be liquidated.
Late last month, High Court (Commercial and Tax Division) gave the retailer 30 more days to amend the agreement and bring on board disgruntled creditors.
Last year, the retailer inked a deal with Jewel Complex Limited to sell its Kasarani land at Sh2.8 billion, which offered its suppliers and creditors some hope for a settlement.
However, the Kenya Defence Forces (KDF) moved its equipment on the 20 –acre piece of land, claiming ownership.
The land ownership dispute is now playing in court, with Uchumi claiming that it has valid title deed.
''The case is for the court to decide. We hope for the best. It will however be unfair if and setting of bad precedent in land ownership in Nairobi if KDF is awarded,'' Mohamed said.
Financial crisis in not a new phenomena at the listed retailer, partially owned by the government (14.6 per cent).
Uchumi sunk into insolvency on June 1, 2006, though it reopened 45 days later following the government’s injection of Sh675 million and a compromise from the PTA Bank and KCB. Uchumi owed the two banks a total of Sh956.7 million.
Ten years later, the retailer recorded an after-tax loss of Sh2.8 billion in 2016.
This saw the firm lobby for a government bailout of Sh1.8 billion to support its operations which were to be disbursed in three installments of Sh500 million, Sh700 million and Sh600 million.
Despite the capital injection, the firm is still on its knees financially, hoping that creditors will agree to the recovery plan.
