NSSF abandons interest on Uganda Clays loan

PIC: Uganda Clays Limited board chairman Martin Aliker. (File)

INTEREST LOANS

The National Social Security Fund (NSSF) board has stopped collecting interest on a loan to Uganda Clays Limited (UCL), where the pension fund is the majority shareholder, as it seeks to convert its debt to equity and sell off part of its new stake to new investors.

The loan, worth sh16.7b in 2014, is now worth 23.2b.

"On the company's request, the board of NSSF resolved to cap the interest accrual on the loan with effect from June 30, 2015," Martin Aliker, the Uganda Clays Limited board chairman, says in the company financial statements.

"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.

"Once an agreement is reached, the shareholders will be duly informed and all regulatory approvals will be sought from the CMA (Capital Markets Authority) and the USE (Uganda Securities Exchange) prior to completion of the transaction," adds Aliker.

With 32.5% shareholding, NSSF holds the largest stake in UCL.

In barely six months, the NSSF loan had accrued interest worth sh3.5b in the first half of 2015.

NSSF is closely followed in ownership of Uganda Clays by the National Insurance Corporation (NIC) at 17.8%.

Other notable shareholders include Kenya power and lighting company, Eliphaz Maari, Timothy Mutebile, Joseph Tukuratiire, Central Bank of Kenya pension fund, Bank of Uganda Staff Retirement Scheme and the Uganda Development Bank.