Zachary Ochuodho @zachuodho
Uchumi Supermarket’s secured creditors have rejected the debt restructuring proposal and creditors’ plan presented by the retailer, saying it should just be liquidated.
In a vote held yesterday, majority of secured creditors, mainly commercial banks voted against the plans by the company to restructure its debt.
Four secured creditors voted against the debt restructuring plan versus two who were for the plan.
However, the majority of unsecured creditors (suppliers) and shareholders agreed on the Collective Bargaining Agreements (CBA) presented to them during the meeting, giving a glimmer of hope that the company may start operating soon.
Yes to proposal
During the event,157 unsecured creditors voted “Yes” for the proposal, while 81 voted against it. Twenty-three shareholders voted for the CBA while six voted against it.
Uchumi Supermarket Chief executive officer, Mohamed Mohamed said adoption by the creditors, shareholders and key stakeholders of the proposed creditors’ plan were important to the restructuring and recapitalising the business.
He said although the journey will be tough the majority votes by the key stakeholders is a good thing in the right direction.
Once the court okays the debt restructuring proposal and credit plan, creditors and suppliers will get 30 per cent of their debt portfolio, while 30 per cent of the debt will be discounted and 40 per cent of the debt will be converted into equity.
Speaking after taking the vote, John Karani, Uchumi Supermarket chairman, said shareholders and unsecured creditors have given them approval to go ahead with debt restructuring proposal and creditors plan.
“This is a vote of confidence – a vote of hope. The shareholders and unsecured (suppliers) have demonstrated that Uchumi Supermarket should be rescued,” he said.
Karani said the majority of the creditors and shareholders agreed on the CBA although it was up to the judge to make that decision.
The court gave the retailer up to May 30 to furnish it with information regarding the debt restructuring plan from shareholders and creditors.
He said the court will issue orders as had been requested by the judge. Uchumi Supermarket has outstanding debt amounting to Sh5.8 billion.
In March, Uchumi Supermarket filed a creditors plan at the High Court outlining the measures the troubled retailer intended to take towards reducing its debt as well as spelling out initiatives towards restocking its branches.
The creditors’ plan presents the most sustainable and viable route to normalcy while taking care of its suppliers, lenders, staff, shareholders and other stakeholders’ interests.
KCB Bank, United Bank for Africa, Co-operative Bank and ICDC are commercial bank creditors.