Red Star Express’ N1.35b rights issue closes

By Taofik Salako, Capital Market Editor

Application list for the N1.35 billion rights issue by Red Star Express Plc closes today. The rights issue had opened on November 11, 2019.

This implies that shareholders have a deadline of the close of business today to pick up their pre-allotted shares.

Red Star Express is raising N1.35 billion through rights issue of 336.86 million ordinary shares of 50 kobo each at N4 per share.

The rights issue was pre-allotted on the basis of four new ordinary shares for every seven ordinary shares held as at the close of business on Wednesday August 21, 2019.

The company has indicated that the net proceeds of the rights issue, estimated at N1.31 billion, will be used to finance expansion of its operations, deployment of improved technology and increase in working capital.

A breakdown showed that the company plans to spend N704 million to develop warehouse facilities on the Lagos-Ibadan Expressway and at the Murtala Muhammed International Airport Cargo Terminal.

It will use N201.65 million to purchase trucks. Also, a total of N154.29 million will be used to improve the group’s information and communication technology (ICT) and Enterprise Resource Planning Solution while the balance of N250 million will serve as additional working capital.

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Chairman, Red Star Express Plc, Alhaji Suleiman Barau, said the success of the rights issue would enable the company to implement key initiatives that will enhance its ability to achieve sustainable growth and value creation for all shareholders.

“By accepting your rights, you will be reinforcing your support for Red Star to explore new opportunities required to enhance the company’s ability to achieve sustainable growth and value creation for all shareholders,” Barau, a former Deputy Governor of Central Bank of Nigeria (CBN), said.

Red Star Express has three subsidiaries – Red Star Freight Limited; Red Star Logistics Limited and Red Star Support Services Limited, as well as Red Star Express, a licensee of FedEx, world’s leading air express company with over 650 aircrafts and more than 270 delivery destinations globally.

FedEx has consistently been rated among the top 10 most admired companies in the world over the past 10 years.