Uganda Clays is bleeding financially. The company’s books of account show that there was a decline in the production of roofing tiles, max pans and half bricks, partly due to the heavy operational costs at their two factories, especially the Kamonkoli branch.
NSSF gains more shares
George Inholo, the UCL chief executive officer this morning made it public that the construction materials company is in dire straits. The company borrowed a 16.7 billion loan from National Social Security Fund (NSSF) in 2010 and have since failed to pay back .
The loan with accrued interest now stands at a whooping 20.6 billion. NSSF which already owns 32.5% shares of the company have agreed to convert the loan to UCL into equity in a bid to secure the company’s future.
“The company and the NSSF have agreed in principle to convert the entire loan and interest into equity. The details of the transaction are being negotiated and will be placed before the next Annuel General Meeting of the company prior to their completion” said George Inholo, the Uganda Clays chief executive officer.
Shareholders make losses
Uganda Clays which is a public listed company is a leading manufacturer of clay building products from their two factories in Kajjansi and Kamonkoli in Mbale.
However, because of the problems with the less productive Kamonkoli factory, the company continues to make losses and has over the years had unsuccessful turn-around bids, including change of top leadership.
The company had drastically cut its losses in 2013 was on the real path to breaking even and eventually giving some dividends to its shareholders. Things dont look any better now and might not with increased competition from other manufacturers, cheap imports and a struggling economy that has slowed down the real estate industry.
