Uchumi prices Rights Issue at Sh9 per share

Uchumi Supermarket has priced its planned Rights Issue at Sh9 per share with hopes of raising Sh895.8 million in additional capital from the existing shareholders.

This comes as industry insiders revealed that the firm’s total borrowing from commercial banks has risen to Sh1.5 billion. Yesterday, Uchumi said in a statement that the Government had committed itself to take up its rights and the firm’s management is hopeful that the offer price which represents a discount of 12.8 per cent from the previous day’s (Monday) closing price of Sh10.15 would tempt other shareholders to follow suit.

Uchumi is looking for additional cash to fund an ambitious regional expansion programme. The shareholders will be allocated three shares for every eight shares held resulting in the issuance of 99.5 million shares.

According to the retailer, the Government, which holds an estimated 13.4 per cent stake in Uchumi, has already issued a written commitment confirming that it will take up its full entitlement in the Rights Issue.
The cash call, which opens on November 10 and closes on November 28, 2014 is expected to raise funds for the company’s expansion drive and shareholders have the next one-week to participate.

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“Uchumi Supermarkets Ltd would like to inform its shareholders and the general public that further to the approval of the Rights Issue by the Capital Markets Authority and the Nairobi Securities Exchange, the registrar of members shall be closed on 22nd October 2014 to facilitate the rights issue processing,” said John Wambugu, the company Secretary.

Last week, the Capital Markets Authority gave its go-ahead for the issue stating that the company had complied with regulatory requirements for public offers and listings. However, according to analysts at Standard Investment Bank, operational inefficiency and lack of aggressiveness in the market has seen Uchumi return reduced revenues compared to its peers in the market.