Hope over Uchumi pay row
The employees of troubled retail chain Uchumi Supermarkets might be paid their three-month salary arrears next week.
The retailer said it hoped to conclude talks with some of its financiers to advance it money to pay staff and tackle some of its pressing financial needs.
Uchumi Supermarkets forced out of Mombasa branch
The firm’s more than 1,300 employees have gone without pay since January. A source yesterday said a local bank had agreed to advance Uchumi money in the hope that it will be able to dispose of its land in Nairobi’s Kasarani area to service the debt.
The retailer plans to dispose of the 20-acre piece of land, which is estimated to be worth about Sh3 billion. The proceeds are expected to boost the amount available for repayment of debts and restocking its outlets.
Contacted for comment, Acting Chief Executive Mohamed Mohamed said the retailer was close to getting the funds to enable it to meet some its short-term financial needs.
He said paying salary arrears to its staff would be a priority, but declined to get into details.
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“We are in talks with financiers to secure funds which will help us deal with short-term needs, but we are still pursuing a strategic investor and are at an advanced stage in talks. The board and management are working tirelessly to restore the liquidity situation of the company,” said Mr Mohamed.
The employees have borne the brunt of the retailer’s current woes. It is not the first time that they have had to go for months without pay.
The financial difficulties have also made the retail chain to move out of some its prime locations owing to non-payment of rent as landlords expressed fears that the company might default in future.
Uchumi nears deal with new investor
The firm, however, hopes to turn the situation around with the planned injection of new capital.
The Nairobi Securities Exchange-listed retailer, which has a legacy spanning over four decades, has been shopping for a strategic investor to pump in between Sh2 billion and Sh5 billion in exchange for a controlling stake.
Mr Mohamed said discussions were at an advanced stage and that the retailer would give a detailed statement on the progress once the deal was done. Uchumi last year said it had narrowed down to three investors from a pool of 36 who had expressed an interest.
Bringing on board an investor successfully will give the retail chain a much-needed lifeline, including a boost in restocking its outlets and easing engagement with suppliers, who are currently only supplying the chain on a cash-on-delivery basis.