Uchumi Supermarkets has taken a Sh250 million short-term loan from United Bank for Africa (UBA) Kenya to pay suppliers.
Uchumi — which is battling a winding-up suit— said it owes suppliers a total of Sh3.6 billion and has turned to bank loans for financing, awaiting earnings from disposal of assets and cash injection from a strategic investor.
This is the second time in three months Uchumi is borrowing to settle suppliers’ dues, having borrowed Sh500 million from KCB Bank in December last year.
“We acknowledge that we cannot rely on bank loans for too long and for this reason we are exploring other sources of funds such as disposal of some assets, engaging a potential investors,” said Julius Kipng’etich, Uchumi chief executive.
“We however continue settling current supplies from our operating cash as well as the savings generated from the closure of some of our branches,” said Mr Kipng’etich in an interview with the Business Daily.
Uchumi has historically been grappling with suppliers’ dues and mounting debts, which led to the listed retailer being declared insolvent on May 30, 2006 and subsequent suspension from trading at the Nairobi bourse where it was readmitted on May 31, 2011.
The retailer has hired Pamoja Capital to help guide the search for a deep-pocketed investor to put in up to Sh5 billion in exchange for a controlling stake in Uchumi. It also plans to dispose of two prime properties: the Ngong Road branch and the Lang’ata Hyper store.
Uchumi last week closed five loss-making outlets, including Nairobi’s Taj Mall, Embu, Eldoret, Nakuru and Kisii, leaving the retailer with 20 outlets in Kenya.
San Giorgio Ltd, a Mombasa-based firm, last week moved to court seeking to sell off the assets of Uchumi to recover unpaid dues amounting to Sh53 million.