File Photo of an Uchumi Supermarket outlet. The positive vote will see the creditors agree in part to debt forgiveness and sees banks write off half of their accruing arrears while suppliers are set to discount 30 percent of their pending repayments.
The vote against liquidation by the retailer’s unsecured and trade creditors serves to preserve value for the stakeholders who come behind commercial banks in a case of the company dissolution.
Uchumi’s liabilities stood in excess of Ksh.7.7 billion as per the firm’s unaudited 2018 trading results against Ksh.731 million in assets available to preferential creditors.
Uchumi creditors have voted to spare the lender from imminent dissolution by backing the firm’s proposed company voluntary agreement (CVA).
The positive vote will see the creditors agree in part to debt forgiveness and sees banks write off half of their accruing arrears while suppliers are set to discount 30 percent of their pending repayments.
Uchumi Chief Executive Officer Mohamed Mohamed has termed the outcome of the vote carried out Monday as a signal of stakeholder confidence in the retailer’s planned turnaround.
“This is a turning point for us. It shows the level of confidence in both secured and unsecured creditors, he said.
On his part, Uchumi Chairman John Karani expects the nod by creditors to pave way to an even tougher challenge of steering the retailer back into profitability.
“When people give you a vote of confidence, I always believe it’s a greater challenge than an otherwise decision. The honours are now upon management to translate that trust. The real work begins now” he said.
An estimated 74 percent of creditors passed the company’s CVA which required a simple majority for adoption to represent parties with arrears totalling to Ksh.3.5 billion.
Monday’s vote was forced upon by the High Court as commercial banks and government sat out of the initial creditors vote in May 2019.While the government issued a letter of support to the process, not all commercial banks have been party to the deal with a single lender voting against the CVA.Previously KCB, Cooperative Bank and Industrial and Commercial Development Cooperation (ICDC) had reached differentiated deals under the CVA plan with KCB and Co-op writing off a combined Ksh.656 million in Uchumi’s debt.The United Bank of Africa (UBA) has however remained unmoved as it demands immediate compensation on balances due.Uchumi is backing its survival on the freeing up of liquidity through partial debt forgiveness and the immediate […]