Yesterday a nearby Uchumi opened to enable customers to buy up dairy products at a 25% discount before the produce spoilt. I bought some mince meat and butter from the roped-off deli section that also included ice cream, eggs, cheese, and frozen chicken. Uchumi has not yet reached the 50% 70% and 90% going out of business sales discount stage, but will it ever get there?
Royal Investment Management Ltd was engaged to advise the Uchumi board on a fund-raising strategy in 2005. In an October 2005 issue of Business Post magazine, the firm’s MD Mr Hardy Pemhiwa wrote that “the initial plan presented to the board was for a strategic equity partner (SEP) to bring in management and capital. However the plan was changed after they realised that all the SEP’s wanted to buy Uchumi cheaply, turn it around and reap huge capital gains. SEP’s had even suggested de-listing the company (which has now happened) and re-list it after a turnaround which would have (unfortunately) hurt Uchumi’s loyal but minority shareholders. So the SEP idea was dropped in favour of a rights issue where relatively unsophisticated, Kenyan investors (myself included) re-capitalised the company which collapsed only seven months later.
There are stories of South African supermarket executives in town with plans to pick and pay for the remnants of Uchumi. But plans to turn round the company quickly are already being thwarted by aggressive suppliers who are silently supported by frustrated shareholders. You would be hard pressed to find a judge who does not have an interest in Uchumi shares or future – and judges are not sympathetic to Bank’s in many receivership and loan disputes since they have also probably had bad personal experiences themselves with Banks.
The June 19 deadline for the sale of Uchumi’s stores is likely to be pushed far into the future because once bank cases go to court they can take years to resolve. Much money will be spent in legal bills to unravel. Meanwhile the parallel investigations are likely to draw in suits against/or proposals for action by the auditors, parliamentary committees, CMA & NSE, maybe KACA and even the government – any of which may take years to implement.
Expects some fireworks at Uchumi lead banker KCB’s AGM on Friday June 16.