Uchumi supermarket suppliers have agreed to start restocking their goods to the retail chain’s shelves this Saturday after signing a deeds agreement that outlines how an outstanding debt of Sh 6.1 billion would be settled.
Suppliers agreed to the retail chain’s proposal to open an escrow account-a dedicated fund that assures availability of cash, where three of its representatives would sit on a yet to be instituted suppliers council board.
Small suppliers with debts averaging Sh 200,000-said could not wade the default shocks would be the first beneficiaries to get cash payments once partner banks and government wires their commitments to the special fund.
A total of Sh 40 million has been set aside for these contractors.
“We have reversed the tide now from a slide by asking suppliers to continue transacting with us in a more systematic way,” said Uchumi Supermarket Chief executive officer, Julius Kipngetich.
The retail chain has cut by three-quarter its monthly expenses from Sh 200 million to Sh 50 million and expressed confidence restocking its shelves would bring it to profit margins in the short term.
Some of the suppliers who had filed a wind up petition said they were partly satisfied with the work plan saying there were fewer details on assurance of a smooth future trade.
“The meeting was under planed, no concrete framework, we need more details and adequate assurance that the proposal will work,” said Kamau Kuria-the lawyer representing suppliers petitioning the retailer.
State Department of trade Permanent Secretary, Chris Kiptoo said the ministry would give an update on its commitment to release its rescue package in two weeks but expressed worries over the pending petition.
“The winding up petition is a key risk,” he said.
Kenya Commercial Bank (KCB) United Bank for Africa (UBA) and Jamii Bora Bank (owns 15 percent stake at Uchumi) have expressed interest to handle the escrow account, promising suppliers invoice discounts.