Suppliers demand Sh35m to drop Uchumi wind up suit

Uchumi Supermarkets will have to raise Sh35 million as deposit to convince two suppliers to drop court case calling for its closure. This is part of the settlement Githunguri Diary and San Giorgio limited are looking for before dropping a wind up petition over unpaid dues.

Uchumi owes milk processor Githunguri Dairy Sh93 million shillings while the Mombasa based food processor San Giorgio is owed Sh42 million.

Speaking to Citizen Digital, Uchumi Chief Executive Officer Dr Julius Kipng’etich disclosed that this was a last ditch effort to keep the doors to the 41 year old retailer open.

“We have negotiated with the two and come up with a payment schedule,” Dr Kipng’etich said.

According to the CEO, UBA Bank has agreed to guarantee the deposit amount with the promise of completing the payment within two months.

“And am glad to say one of our bankers UBA has accepted to give them a guarantee, which will help to pull the case out of court,” Dr Kipng’etich said in an interview.

On Friday, Uchumi lost a petition to have the wind up suit by the two firms determined under the current Companies Act and now faces express liquidation if it fails to honor its debt. The new act could have given Uchumi time to make pay off its dents instead of being sold to recover the debt.

News of the closure rocked the retailer’s stock which closed Monday on an all time low of sh2.90 at the Nairobi Securities Exchange.

With company bleeding money, its debt to bank’s and suppliers continued to rise. Suppliers are owed an estimated Sh3.8 billion shillings while banks on the hand are owed Sh3 billion.

Uchumi has reached a settlement with most of its suppliers, agreeing to convert Sh1.8 billion of the debt owed into equity in the firm. The government has also talked of injecting Sh1.2 billion shillings into the retailer while KCB and UBA are said to be standing by with a loan of Sh600 million.

However all the recapitalizing plans are on ice pending the outcome of the wind up suit.