Uchumi property sale plan hits rough patch

Uchumi Supermarkets faces a fresh hurdle in its recovery strategy, after the Kenya Airports Authority, (KAA) claimed ownership of a prime property the retailer has put up for sale.

The authority warned buyers on Wednesday that a parcel of land Uchumi is seeking to sell does not belong to it.

“It has come to the attention of Kenya Airports Authority that Uchumi Supermarkets, who purport to own the land, is trying to sell, lease or deal in one way or another with the parcel of land any person entering into any agreement or arrangement, whether for sale, lease or otherwise with any person other than KAA does so at his own peril,” said a notice by KAA published in the Press.

The authority further threatened to move to court to prosecute the retailer and any persons dealing in the property.

As part of its turnaround plan, Uchumi Chief Executive Officer Julius Kipng’etich recently said the retailer had put up for sale some of its property, adding that some of the proceeds would help it stabilise.

Experts said the move by Uchumi to dispose of some of its assets to pay off a mountain of debts is necessary.

“Dr Kipn’getich has so far done exactly what you would have wanted from a turnaround specialist. He has outlined the path to squaring off the deficit via sale lease backs of key properties. He has also moved to stem the bleeding (in Uganda and Tanzania) and essentially right-sized the business. I think either way, Uchumi rebounds from here and might well prove a take-over target as well,” Nairobi based analysts Aly-Khan Satchu told the Nation.

The retailer last month announced closure of its operations in Tanzania and Uganda in a drastic reorganisation it said is intended to stop financial bleeding.

SOURCE: DAILY NATION