Uchumi has suspended the search for a strategic investor who’d have injected Sh. 5 billion bailout into the ailing retailer. This comes a week after the government pledged to offer Uchumi Sh.1.2 billion bailout.
According to Uchumi CEO Julius Kipng’etich, Uchumi’s negative net worth made it difficult to get a deep-pocketed investor whose entry would have also caused a major dilution of existing shareholders.
He added that a rights issue is also difficult in the context of the share price collapse to the current level of Sh.4 on the Nairobi Securities Exchange (NSE).
“Getting a strategic investor now will be punishing existing shareholders,” Mr Kipng’etich told Business Daily. “We plan to use the government cash injection to get out of our current position.”
The retailer has scaled down its operations significantly, closing several stores amid increased liabilities including supplier debt. Uchumi emerged with a negative equity in the half year ended December as total liabilities surpassed its assets by Sh181.8 million.
