Uchumi sticks to rights issue price

Uchumi Supermarkets will not change the price of its rights, even as a drop in share price to a 12-month low threatens to put paid to the cash call.

Speaking at its annual general meeting on Wednesday, company Chief Executive Jonathan Ciano urged shareholders to back the retail chain by taking part in the issue.

Currently, Uchumi shares are retailing at Sh8 while the rights are going for Sh9.

Rights issues are normally sold at a discount to encourage shareholders to buy more with those who wish not to take up their rights able to dispose of them on the open market.

The retailer is seeking Sh895 million in fresh capital from shareholders. Owners can now buy three new shares for every eight held.

SAW NO DEAL

While by close of Wednesday’s trading, a total of 1.2 million shares had exchanged hands, the relatively high price of the rights saw no deal since it opened on Monday.

Mr Ciano blamed the drop in stock price on individuals whom he accuses of having set their sights on taking over the retail chain.

“You witnessed your company going under, it came back with big debts. It has paid the debts by denying you dividend. Having now paid the debts, are we now going to allow somebody else to come and enjoy your supermarket with 40 branches with no debt? No, we cannot do that,” Mr Ciano told the shareholders.

When Uchumi re-listed on the NSE, Mr Ciano said, the share price was around Sh13. “When analysed who was buying, these shares were being bought generally by foreign shareholders,” he said.

The foreigners then moved from owning about 25 per cent to about 40 per cent.

THEY HAVE NO INTEREST

“What the foreign investors have done now that we have the rights issue is show no interest in keeping up with the supermarket. They were traders, but have sold out. That selling by foreign shareholders has unfortunately brought the share down together with the market prices,” explained the chief executive.

The government, which holds an estimated 13.4 per cent stake, on Wednesday announced its commitment to take up its entitlement in the rights issue to a tune of Sh264 million.

Mr Ciano called on shareholders to follow the government’s move and invest in the rights issue.

“The government has given you a clear guide on what needs to be done. At the end of the day we are growing the supermarket.

“The issue is not a shilling; the issue is Uchumi needs money and giving Uchumi money at Sh9 per share, you are actually buying value,” said Mr Ciano.