The High Court in Kampala has temporarily blocked the National Social Security Fund (NSSF) from taking over the majority shareholding of the heavily indebted Uganda Clays until the substantive suit is heard and disposed off.
The order restraining NSSF from the acquisition of the majority shares of 66 per cent of Uganda Clays was issued on Tuesday by the Deputy Registrar of the court Mr Charles Emuria.
This followed an application to court by one of the minority shareholders Mr Habib Sembatya.
Mr Sembatya’s concern is about the high costs involved in the running of the new factory at Kamonkoli, near Mbale Town in Eastern Uganda, which he says have in turn indebted the Kajjansi-based factory that produces roofing tiles.
“An interim order doth issue restraining and prohibiting the 2nd respondent (NSSF), its employees, agents, servants or persons acting under its authority from converting its Shs16.7 billion loan to the 1st respondent (Uganda Clays) into equity and or acquiring a super-majority shareholding of 66% in the 1st respondent’s company until the main application for a temporary injunction which is fixed for the 10th day of November, 2014 at 11:00am is heard and disposed off,” reads the interim order in part.
The chafing between NSSF and Uganda Clays stems from the Shs11 billion that the Fund extended to the latter in 2010 as a bail out of a surging debt following the opening of the Kamonkoli factory.
It’s alleged that Uganda Clays failed to service the Shs11 billion loan within two years as agreed and this has now escalated to Shs16.7 billion.
To that extent, NSSF was planning to convert the accumulated loan of Shs16.7 billion into equity and acquire a super-majority shareholding of 66 percent in Uganda Clays, which move, Mr Sembatya representing the minority shareholders has rejected by running to court.
He reasons that should NSSF acquire the majority shareholding of 66 per cent, it will sell the very shares to a strategic investor who will benefit himself and leave them out as the minority shareholders.
Court will start hearing Mr Sembatya’s substantive suit on Monday next week.
SOURCE: Daily Monitor