The bid for regional supermarket chain, Uchumi, has been dented by the decision to suspend its activities on the Ugandan Securities Exchange, USE, for violating the rules of the game.
The retailer has recently launched a revival bid to reclaim the market it once led in the region together with fellow Kenyan company, Nakumatt.
Uchumi is listed onto the Nairobi Securities Exchange, and the shares are also cross-listed on the USE and the Dar es Salaam exchanges.
However, Wednesday this week was the last day of its trading on the Uganda Securities Exchange after the it was suspended for reportedly failing to meet the requirements.
In a public notice, USE Chief Executive Officer, Paul Bwiso said trading in Uchumi’s shares and the listing of its shares on the bourse had been suspended, until the company meets all the requirements.
These include providing information about its shareholding and finances, as well as committing to what is termed as ‘continuing listing obligations.
The USE says Uchumi was suspended because it has failed to comply with listing obligations prescribed under the USE Fees, Charges and Penalties Rules of 2021 and the USE Listing Rules of 2021, respectively.
“The challenge we faced with Uchumi at the exchange, and probably not on the USE only, but even at Nairobi and Dar Es Salaam Stock Exchanges where they are cross-listed, you are aware that Uchumi had some financial issues at the time and went into some credit management initiative and to restructure the company,” says Bwiso.
He says that since 2017, the market and the regulators have been waiting for the company to honor its obligation as promised then. Uchumi even asked for certain waivers and some time to restructure debt and stabilize the company, then revert to prudent reporting as required but it failed.
These are requirements to disclose information to the public continuously, to keep the public informed.
He says that reinstatement of trading of the Company’s shares and its listing shall be after full and satisfactory fulfilment of the reinstatement conditions communicated to Uchumi in a suspension notice dated July 19.
Bwiso says if they fail to adhere to the conditions given, the USE will have no choice but to terminate the listing. He says the regulators and the USE have ensured that Uchumi goes through all the steps as required before such a decision is made,
By 2015, Uchumi had 40 outlets including six in Uganda and four in Tanzania, before it started experiencing financial problems, mainly arising from competition and mismanagement. It remained with only two outlets, all in Nairobi Kenya by 2019.
Three weeks back, it announced plans to get back onto the market, saying it had got the support of the Kenyan government, which is a major stakeholder in the company. It then opened its third supermarket, also in Nairobi.
So, as it fights to remain listed on the three bourses, it faces an uphill task of regaining its market which has since been invaded by foreign companies mainly from South Africa.
But in Uganda, the market is increasingly being dominated by the local investors.
Uchumi has over the time seen its shares fall from 30 shillings (9 Kenya shillings) to 10 shillings (0.27 Kenya shillings) on the NSE, while on the USE it sells at 8.27 Uganda shillings