This archive report was first published on 12 November 2019.
Published on November 12, 2019, Uchumi Supermarket has secured a significant debt relief deal with Kenya Commercial Bank (KCB) and Cooperative Bank of Kenya.
The agreement, which is subject to certain conditions, will see KCB write off Ksh.365.6 million in accrued interests and penalties, while offering a 44% discount on its lease facility worth Ksh.180.9 million.
Cooperative Bank, on the other hand, has offered a 40% waiver of its total outstanding loan facility, including both principal and accrued interest, amounting to a Ksh.109.1 million write-off.
However, the retailer must pay 10% of the outstanding Ksh.163.6 million after the write-off immediately.
Uchumi has been struggling to sell its company voluntary agreement (CVA) to lenders, with United Bank of Africa (UBA) objecting twice to the retailer's debt restructuring proposal.
UBA has demanded an upfront settlement of 70% of the outstanding loan totaling Ksh.180.5 million, including accrued interest, and a clear demonstration of the source of the pre-payment before approving the CVA.
Despite the tough business environment, Uchumi remains optimistic about sealing the CVA and returning to profitability.
“At the present moment, the business environment is harsh and challenges meeting all obligations. However, acceptance of the CVA will eventually enable the company to get back to normalcy,” Uchumi Chief Executive Officer Mohamed Mohamed told journalists.
