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{
    "id": 247365,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/247365/?format=api",
    "text_counter": 223,
    "type": "speech",
    "speaker_name": "Dr. Kituyi",
    "speaker_title": "The Minister for Trade and Industry",
    "speaker": {
        "id": 293,
        "legal_name": "Mukhisa Kituyi",
        "slug": "mukhisa-kituyi"
    },
    "content": " Mr. Speaker, Sir, I have been operating between a rock and a hard place; my desire to nurture Uchumi as a Kenyan enterprise and the limits put on me by law as a minority shareholder in the company, inspite of my desire to nurture the public interest. Faced with this reality in late 2004, I convened a meeting in my boardroom with the principle creditors of Uchumi Supermarkets, members of the board and the management at that time. We deliberated on what is the best way to avoid it going under. We agreed on a number of actions as a way of raising the requisite Kshs2.5 billion to keep it afloat. The measures we agreed upon included the following: Recapitalization of the company through issuance of the rights issue, change the management and identify a strategic partner and delete it from the Nairobi Stock Exchange market until it regained a healthy situation. In addition to all these, the Government extended further credit, in the year 2004, amounting to Kshs104.14 million through the ICDC and ICDCI. The Uchumi Board of June 13, 2006 PARLIAMENTARY DEBATES 1281 directors and management also closed down ten of their branches in February 2005 and laid off 577 employees through a restructuring programme. Through the rights issue of October 2005, a number of loans including the ICDC credit facility were repaid. Despite the successful rights issue and the sale of fixtures and fittings amounting to Kshs173 million, the targeted capital requirement of Kshs2.5 billion for the turn- around programme was not realised. When we sought a strategic partner, the three companies which showed interest, including Shoprite of South Africa and Transcentury of Kenya, later on, retreated after looking at the financial health of the company. As a result, the company was unable to meet most of its operational obligations and had to resort to sale revenue to repay bank loans obligation. This, in turn, denied the company the necessary working capital that significantly contributed to the current situation. Mr. Speaker, Sir, against this background, come the events of the last two weeks, which are the main issues that have raised concern among members of the public. A special board committee was formed on 23rd May, 2006 to assess the viability of Uchumi Supermarkets as a profitable business entity. The special board committee reviewed the performance of the company for the last one year and noted that poor profit margins and increased debt portfolio meant that the business was untenable and should be declared insolvent."
}