Uchumi Supermarkets Plc formed a subsidiary dubbed Kasarani Mall Ltd in 2001 and pumped KES 109.8 Million. Kasarani Mall was to drive the retailer’s expansion plan. It bought 20 acres along Thika Road County from Solio Construction Company Ltd for Ksh 85 million on the 20th of March 2001. Back then Thika Road was still a clogged two-lane road.
Over the next four years under the leadership of its chairman Chris Kirubi and CEO Kennedy Thairu, the retailer went on an expansion binge that was soon to land the retailer into financial distress. Stockouts, delayed salaries, and a heavy debt load made a volatile cocktail mix.
Here is Part 1 of the Story: The Church, The Soldiers, And Uchumi’s Land: An Intricate Tale Of Land grab, Failed Revivals And The Fate Of Thousands Of Suppliers Hanging In The Balance
It was around this time that the company decided to sell its 20 acres to get much needed cash.
In February 2005, Uchumi Supermarkets invited bids for LR No. 5875/2 and LR No. The Kasarani land. This advertisement caught the attention of Sidhi Investments, a company that the Daily Nation described as being associated with a “controversial businessman from Ukambani.”
Sidhi Investments instructed Daly & Figgis Advocates to place a bid for the land. After negotiations Uchumi agreed to sell the land for KES 118 million and accepted the offer on 9th March, 2005 with Sidhi Investments paying a 10% deposit.
But on 11th March 2005 while Sidhi Investments was waiting for a formal sale agreement, Uchumi re-advertised the sale of the land. Sidhi Investments went to court, arguing that the agreement was binding, in short it said it would take its pound of flesh to the last ounce.
While the matter was in court, things went south for Uchumi Supermarkets and in June 2006, the company was delisted from the Nairobi Securities Exchange (then the Nairobi Stock Exchange) and shut its doors after 30 years of operations. It was one of corporate Kenya’s worst disasters.
Trade Minister Dr. Mukhisa Kituyi, under the Kibaki regime, believed Uchumi Supermarkets was too vital to fail. He initiated a government-funded rescue plan, which successfully revived the company, leading to its re-listing on the stock exchange in 2011.
But Uchumi Supermarkets was a case of the same script but a different cast. It had a new board, new CEO but executed the same overexpansion strategy that got it into trouble in the first place. Needless to say, by 2015 under the leadership of Jonathan Ciano, the retailer was once again teetering into bankruptcy and again, selling the 20 acres it had was its silver bullet.
There was a problem, Sidhi Investment. The company still wanted its 20 acres. To solve this, Uchumi and Sidhi Investments reached an out-of-court settlement where Sidhi Investments would drop its case in exchange for cash to be paid once the land was sold.
By late 2018 the value of the 20 acres had risen to KES 2.4 Billion and Sidhi’s stake was now worth KES 840 Million. Courtesy of the rapid land price appreciation caused by completion of the Thika Superhighway.
As expected in such cases, there are always busybodies betting to wiggle their way and get some payoff or hush money.
Among these carpet baggers was the Roysambu Self-Help Group which tried to assert its ownership, but their claim was dismissed by the courts.
In comes Jesus Winners Ministry.
Around 2018, Jesus Winner Ministry through Jewel Complex Ltd entered into a sale agreement with Kasarani Mall to purchase the 20 acres.
Jesus Winner Ministry paid a deposit of KES 330 million for the purchase value of KES 2.8B, where the balance was supposed to be financed by a local bank. The disposal of Kasarani land was part of the turnaround plan which would have also boarded an investor subsequent to the disposal of the non-core assets (that included Ngong Hyper which was sold in 2015) and the overall restructuring of the balance sheet.
The proceeds from the disposal of the entire 20 acres would be a critical part of its turnaround strategy, enabling the company to settle obligations with creditors, employees, and to pay statutory deductions, including remittances to the Kenya Revenue Authority, National Social Security Fund (NSSF), and the defunct National Health Insurance Fund (NHIF).
The total value of the proposed restructuring was approximately KES 4.5 Billion arising from discounts/partial debt write off and proposed partial conversion of the debt to convertible preference shares from some of the financial institutions and trade creditors.
Just as a resolution seemed imminent, the Kenya Defence Forces (KDF) intervened, disrupting the process.
The subsequent impact of the KDF’s involvement will be examined in the next part.
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