Shares of Uchumi supermarket continued an upward rally at the bourse this week following revelations of possible cash injection by a strategic investor.
While other counters suffered a lull or no-show performance, the retailer shrugged off post-poll jitters to post an impressive Sh4 per share sale for 937,700 shares, up from last Monday’s 3.70 price when it moved 514,100 shares.
On Friday, the government-owned listed firm issued a statement exuding confidence of a impending deal between it and a strategic investor who had pledged to pump in Sh3.5 billion to acquire a stake.
This, they said, would help them settle debts owed to suppliers and property owners in Kenya, Uganda and Tanzania, with part of the proceeds to be used in replenishing stocks.
The announcement on August 5 elicited positive interest in Uchumi shares that witnessed a sharp rise in trading from the 35,300 shares sold on August 3 to August 5’s close of day price of Sh3.45, where 828,400 shares were dealt.
Uchumi’s chief executive Julius Kipng’etich said the cash-strapped chain was seeking between Sh3.5 billion to Sh5 billion of debt capital through issue of convertible debt instrument or outright purchase of equity or a combination of both.
On Friday, Uchumi said the process of bringing on board a new investor would take four months or less, adding that the funds realised would help revamp its operations, stock up shelves, pay suppliers and rebuild customer confidence.
“The transaction process will come to a conclusion within the stipulated time or less, marking the last mile of Uchumi’s recovery,” said the CEO.
While auditors blamed Uchumi’s woes on mismanagement and abuse of office, the retail sector’s market leader Nakumatt has been suffering financial woes that saw it announce plans to bring in an investor to inject an undisclosed sum of money for a 25 per cent equity.
The firm has sought court intervention to avert seizure of its assets to repay rent arrears for two of its stores while workers have been going without salaries, raising fears on its preparedness to handle expansion into East Africa.
The regional operator with 65 stores across Kenya, Tanzania, Uganda and Rwanda has expressed optimism of returning to profitability, but emerging details show all is not well with suppliers, workers and property owners who remain unpaid.
Suppliers Association chairman Kimani Rugendo said talks were ongoing over unpaid deliveries.
In its rescue plan, Uchumi saw Dr Kipng’etich move in, closed its Uganda and Tanzania subsidiaries, as well as several branches in Kenya, and got a not from shareholders to seek injection of fresh capital.
It also sold its Ngong Hyper and Lang’ata Hyper properties on a buy-lease back arrangement.