Cash-strapped retail chain, Uchumi Supermarket, has secured a strategic investor in a deal that is expected to revive the company.
The retail company had in December 2015 announced it was looking for a strategic investor to take a controlling stake in the firm in exchange for KSh5 billion capital injection.
A section of public notice for the Annual General Meeting that took place January 2016 read:
“The directors are hereby authorised to identify and negotiate with any suitable investor to raise any sum up to a maximum of Kenya Shillings five billion by way of debt capital through the issue of convertible debt instruments or by way of equity capital by way of private transfer of shares in Uchumi to the investor or a combination of both options.”
Uchumi Chief Executive Julius Kipngetich has now told Capital FM Business that they have indeed secured an investor. He, however, said the deal is awaiting regulatory approval before it is officially announced.
“We will announce in a few days once all the necessary approvals are finished,” Kipngetich said.
The strategic investor will inject KSh3.5 billion into the retailer which will help cover its KSh 5 billion debt to suppliers and financiers. The government is also expected to release KSh1.2 billion to the retailer as part of a bailout loan previously agreed on.
“We have so far received KSh500 million from the government and with the injection from the investor, we are now ready to restock our stores in the next 90 days. Our franchise model of business will also begin in those 90 days,” said the Chief Executive.
“We are lucky we have assets which we are planning to liquidate according to our needs. Everything has been planned and we will announce in due course,” he added.