Suppliers’ debts to dilute Uchumi’s shares

A new deal to convert 1.8 billion shillings of suppliers’ debt is set to dilute Uchumi shareholders hold in the company.

This is a measure of last result for the 41 year old retailer as it struggles to remain operational despite a huge debt burden.

A note from Standard Investment Bank indicates that the valuation of Ksh 3.50, current shareholders could have their stake diluted by 58.5%.

Mid-tier lender Jamii Bora is the largest shareholder in Uchumi with 15.8 stake followed closely by the government, through the Ministry of Industrialization at 14.6 percent.

Treasury has already committed to inject 1.2 billion shillings into Uchumi as part of revival plans.

Uchumi is on Monday expected to meet with six suppliers who have filed a liquidation suit against it to get them to drop the suit and speed up the recovery plan.