After months of empty stalls at several Nakumatt outlets around sparked speculation over the future of the largest supermarket chain in Uganda, the retailers’ parent company in Kenya – Nakumatt Holdings has raised Ushs1.75 billion (about Kenyan Sh500 million) through a short- term loan.
In October last year, Nakumatt Managing Director Atul Shah revealed that it is engaging financiers to provide bridge financing options for the company to stay afloat.
READ: Uganda’s bad economy leading to our collapse claims cash-strapped Nakumatt
Fast forward into the new year, it has been revealed that the retailer went to the market seeking a loan through an insured loan and got all it wanted, signalling investors’ confidence in its ability to repay the debt.
The loan comes ahead of Nakumatt’s plan to raise billions of shillings from the sale of a 25 per cent stake to an undisclosed investor according to Nairobi based Business Daily Africa.
The retailer made the move after a sharp rise in debt that has constrained its cash flows, leading to delays in paying suppliers. Part of the new capital is set to retire some of the outstanding debt that has earned the retailer a credit rating downgrade.
Kenyan businessman John Harun Mwau recently sold his 7.7 per cent stake in Nakumatt ahead of the dilutive entry of the new investor in the company.
It is not clear how much Nakumatt could raise from the new investor, but the amount could top the Ushs350 billion (Kenyan Sh10 billion) mark if the retailer has maintained or grown its value from three years ago when its CEO Atul Shah said it was worth about Ush168 billion (approximately Kshs40.8b).
Nakumatt operates nine outlets in Uganda, but most of the shelves at Oasis Mall, Metroplex Mall, Mbarara Branch, and Bukoto Branch have largely been empty. The supermarket is facing similar challenges in its market in Kenya.
Last year, Uchumi another Kenya-based supermarket closed its operations in Uganda, plunging unpaid suppliers into loss and protracted talks.
