Uchumi head office to be auctioned over Sh60 million debt
Uchumi Supermarket is set to come face to face with auctioneers if it does not settle a debt of nearly Ksh60 million it owes its landlord. Kenya’s oldest retail chain, which has been facing financial difficulties, owes the Kenya National Trading Corporation Ksh59 million in rent arrears for its head offices in Industrial Area, according to sources familiar with its operations.
The raid on Uchumi could bring its operations to a halt as KNTC godown on Yarrow Road houses its head of office, the nerve centre of its retail activities.
The debt is said to have accumulated over the last two years as the retailer struggled with meeting its financial obligations due to cashflow issues. KNTC, which is owned by the government, has issued Uchumi management with notice of auctioning its assets and even retained an auctioneering company to execute the matter.
Uchumi is among a list of companies that have defaulted on paying rent to KNTC across the country, which is estimated at close to Ksh2 billion. KNTC is taking similar actions against these companies, mostly manufacturers based in Industrial area who have hired its godowns.
Uchumi has rented godowns from KNTC in industrial Area, Nairobi, which also house its head offices. The godowns are used to hold stocks and other merchandise before distribution to the branches. The auctioneers are likely to confiscate stocks and lock its head office from operations.
The supermarket’s recovery from financial ruin caused by former CEO Jonathan Ciano has been slow. In the year ending 31st December 2017, the retailer returned a loss of Sh895 million, pushing it deeper into the red, from Sh547 million the previous year.
If it is auctioned, it will join Nakumatt Supermarket, which has been kicked out by most of its landlords for failure to pay rent.
In December last year, the struggling retailer stocked its empty shelves after receiving Ksh700 million from the government, which brought total bailout package from Treasury to Ksh1.2 billion in the past one year. The government, which is the main shareholder, was expected to pump in a total of Ksh1.8 billion through shareholder loans, but the delays in disbursing the funds have complicated the retailer’s turnaround plans.
If it is auctioned, it will join Nakumatt Supermarket, which has been kicked out by most of its landlords for failure to pay rent. Some have confiscated its assets and halted operations in majority of its branches.