Uchumi Supermarkets recovery efforts have hit a snag after the government ruled out a financial bail out. The retailer had earlier received Ksh1.8 billion shillings from the National Treasury which would be used to repay debts owed to suppliers and stock its stores with goods.
The government had approved the Ksh 1.2 Billion cash injection into Uchumi Supermarkets at a Cabinet meeting in 2016, which now appears will not be released any time soon.
Trade Principal Secretary Dr. Chris Kiptoo says value from the previous bailout money has not come forth, arguing the government ran the risk of losing money when entities fail to turnaround.
He added that the government will form a team to draft a comprehensive recovery plan before more funds can be injected into the retailer that is reeling under a huge debt stock running into billions of shillings.
The retailer had last year announced it had finally found a strategic investor to take a controlling equity stake in the business in exchange for a Ksh 3.5 billion capital injection.
New York based private equity fund, Kuramo Capital had started negotiations to take over a significant stake but later on bailed out with a new equity investor from Asia said to take over negotiations.
In March the troubled retailer was seeking a bank loan to pay employee arrears amounting Ksh150 million by April this year.
Currently only 12 outlets are still open from a total of 40 three years ago due to rent arrears and auctioning by suppliers to recover debt.
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