One year ago today, Uchumi closed down. The management resigned, and the government later stepped in with a rescue package, receiver manager, and arrangements with the companies’ banks.
AGM season; Yesterday Uchumi held a meeting for shareholders. Watching KTN, it appears the media were kept out (as had been at past shareholder meetings). I was not able to attend (as a shareholder) and I am requesting any reader who attended to comment with a synopsis or key issues mentioned at the Uchumi meeting or any other AGM at KICC yesterday. Anonymous comments are given less weight, so do sign your comment with a name/profile please. (Media reports here and here)
This is AGM season and there are too many events to cover. I have tried to avoid going back to the same companies, but when you have two or three on a given day, in addition to other duties – yesterday company AGM’s included Nation Media Group, Standard chartered and Uchumi, one can’t be everywhere.
Uchumi Receivership: Media reports indicate that Uchumi (under receivership) may have improved performance by 50% over their best recent year. The audited results have not been released do they public, nor do they when a company is under receivership.
A receiver / manager (RM) (or bank hangman) is appointed by debenture holders (usually bank or financial institution) when they see a company is going to crash. His/her job is to salvage what they can for the banks to recover their money (usually by sale of assets), not other shareholders or suppliers. By that measure, the Uchumi team (led My Mr. Ciano) has gone an extra mile in engaging & informing suppliers and shareholders in the recovery plan. Shareholders because Uchumi needs their goods on the shelves and shareholders to raise money.
RM’s usually are unable to revive companies. This is because, by the time they are appointed, the company is beyond salvation. The owners/management will have run it down, hidden information from banks on the poor performance of the company, withheld payments to banks, staff and unfortunately to the tax man and city council, among other fatal decisions.
Some RM’s have gotten very rich in this country, selling the assets of the company to themselves – at throwaway prices, employing their relatives, and enjoying the power to manager giant companies that they would not have risen to manage even if they had worked for 50 years. For others it has become a permanent way of life, as the company (under their management) remains profitable and they see it as a long-term job – see the Nairobi Grand Regency Hotel – that has been run by different RM’s for over 10 years now). RM’s also have to contend with lengthy court battles with the previous owners who also meddle in the company’s affairs through proxies.
But occasionally, and if appointed early enough, an RM can actually save a company. He/she can make some harsh decisions to trim fat e.g. shut down an unprofitable unit that was consuming too much money, terminate bad contracts, and fire excess/expensive employees. They are able to make decisions that a sentimental management were unable to. It has happened before (rarely) and sometimes the now grateful previous owners will acknowledge the work of the RM to turn around the company and will now come back and pay the bank and takeover their now lean & profitable company.