Uchumi Supermarket is seeking to raise about Ksh Five Billion by selling a significant stake to a strategic investor. The move will allow creation of additional one billion shares to accommodate the new investor, which will more than double its current authorised shares of 900 million units.The plan which will be tabled under special resolutions is set to approved by the shareholders when they meet next month in the Annual General Meeting.
Through a notice on the local dailies,the retailer says the cash may be raised in form of equity or convertible debt and even a combination of both, a move that will result in a major dilution of current shareholders as the new investor could assume a controlling or majority ownership of the retailer.
However,Uchumi’s directors are yet to establish the terms of the transaction.
“The directors are hereby authorised to identity and negotiate with any suitable investor to raise any sum up to a maximum of Sh5 billion… by way of debt capital through the issue of convertible debt instruments or by way of equity capital by way of private transfer of shares in Uchumi to the investor or a combination of both options,” reads part of the resolution.
Uchumi supermarket has 364.9 million issued shares,which means the retailer is valued at Ksh 3.2 Billion as at yesterday’s Trading price of Ksh 8.90.
The Sh5 billion cash to be raised is 54 percent higher than the company’s market capitalisation.
Uchumi’s Share price has lost lost 10% since January 2015.
Part of the cash to be raised is expected to be used in repaying the retailer’s debts that have significantly contributed to its losses.
