[2008-04-10]  UCL in Stock Boom
An exceptional oversubscription for Uganda's first rights issue at the stock market has raised about one billion shillings in excess of the target, according to an official at Dyer and Blair Investment Bank.

A 10 per cent oversubscription was realised from the rights issue carried out by Uganda's largest supplier of bricks and tiles Uganda Clays Limited (UCL), according to results released by Mr Njoroge Ng'ang'a the General Manager Dyer and Blair, the lead broker of the firm's rights.


A rights issue is a process where existing shareholders are given the first priority to either buy or reject shares in their company. Last year, UCL a listed company at the Uganda Securities Exchange tapped into the opportunity to raise Shs10.6 billion from its shareholders through the process which ended last month.

"The rights issue was highly successful. The target amount to be raised was Shs10.6 billion, the amount raised was Shs11.5 billion which was a 10 per cent oversubscription," said Mr Ng'ang'a while announcing the results in Kampala, at a press briefing on Tuesday.

Cash generated will be used to finance loans from Standard Chartered Bank and East African Development Bank which advanced money to UCL to fast-track the construction of its Shs24 billion Kamonkoli factory in Eastern Uganda.

The rights issue gave the shareholders an opportunity to acquire a maximum of four shares out of every five shares at a discounted price of Shs2,650 compared to the current market price of Shs6,780. Mr Ng'ang'a added that the over subscription resulted into all those who applied for their rights achieving their share of the stock.

"Some others didn't exercise their right so certain shareholders applied for more rights and of those, (unsubscribed) they got 40 per cent each of what they had applied for as additional shares. UCL has in excess of one thousand shareholders.

Mr John Wafula, UCL's CEO applauded the shareholders for raising the money and promised to advance the company to new heights. "We wish to thank them wholeheartedly for the confidence they have placed in the Board and Management. We now expect a period of unprecedented growth in the medium term as the rights issue has opened enormous possibilities for the Company in the region."

Mr Ng'ang'a noted that the oversubscription was a manifestation of the confidence the shareholders have in the company which was listed on the Uganda securities Exchange in 2000.

"The oversubscription means that the appetite (for shares) in the market is growing. It means that there's very strong confidence in Uganda Clays as a stock, that the market has woken up to the benefits of investing in the capital markets and that the share price of UCL will continue to do well because there is still demand for the share," he explained.



Source: Copyright © 2008 The Monitor.