The Nation Newspaper

Tag: companies

  • Firm sensitises companies to act

    The Eni Group made up of Nigeria Agip Oil Company (NAOC) Nigeria Agip Energy (NAE) and Agip Energy and Natural Resources (AENR) has promised to sensitise Nigerian companies on the opportunities available to them in the Nigeria Oil and Gas Industry Content Development (NOGICD) Act of 2010.

    The General Manager, District of NAOC, Mr Paola Carnevale made the promise during the Vendor Upgrade, Awareness and Sensitisation Engagement, which is the third session of the Nigerian Content Week organised in Port Harcourt by Eni for indigenous contractors in the oil and gas industry.

    Carnevale said the training programme, which is in collaboration with the Nigerian Content Development Monitoring Board (NCDMB), would help to enlighten indigenous companies on the provisions of the NOGICD Act.

    Other aspects of the training which he said companies would be enlightened on are “the key requirements for successful tendering and contracting process targeted at eliminating Nigerian content failures; Nigerian content measurement and evaluation; Nigerian content opportunities as well as NCDMB monitoring requirements.”

    He also said the initiative, which began  last year, has so far been attended by 250 companies, pointing out that out of this number, 130 promising companies that were unable to scale the Nigerian content pre-qualification participated in the third session of the training.

    In his keynote address, the Executive Secretary of NCDMB, Mr Denzil Kentebe said the NOGICD Act is a “demonstration of government’s emphasis on indigenous contractors’ active participations in the oil and gas sector.”

    Kentebe, who was represented by the Manager, Monitoring and Evaluation of NCDMB, William Arikekpar also stressed on the five major roles which the NOGICD Act conferred on his board, adding that “the focus of Nigerian content is not ‘Nigerianisation’ of the oil and gas sector but ‘domiciliation’ of value-adding activities.

    The NCDMB boss also said his organisation’s Nigerian Oil and Gas Parks Scheme (NOGAPS) programme would create about 10,000 direct jobs from parks design, construction operations and support.

    Continuing, he said the NOGAPS would stimulate manufacturing of equipment packages, components and spares for oil and gas industry and develop local small and medium entrepreneurs (SMEs) and then partner them with original equipment manufacturers to enable them acquire manufacturing expertise.

    While advising local vendors to take advantage of the fairs being organised for SMEs, he also promised researchers and academics specialised in oil and gas research to adopt and create funding mechanisms for research work and clusters, majority of which are in the Niger Delta area.

     

  • Investment One advises companies on how to raise funds

    Investment One Financial Services Limited has underscored the need for Nigerian companies to seek professional advice on their capital structure and available financing options in order to grow their businesses and avoid financial shocks.

    At a seminar organised by Investment One Financial Services Limited in partnership with the Network Business Club, experts discussed various ways to attract smart money to grow business.  The seminar was directed at different levels of business, ranging from large companies to Small & Medium Enterprises (SMEs) looking to bring their business ideas to reality or scale up their business. The seminar thoroughly examined how to attract smart money and had various speakers who addressed various aspects of the seminar theme.

    Managing director, Capital Management Division, Investment One Financial Services Limited, Mr Ademola Aofolaju said companies must realize the importance of correct capital structure for their particular kind of business.

    According to him, the proportion of debt to equity may be related to growth potential and cash flow and the varying business needs which may include expansion, working capital and asset acquisition.

    He also outlined the detailed requirement for attracting smart money which include the 5Cs of capital, cash flow, character, capacity and collateral, adding that other requirements may include experience, sound operations, financial records, governance structures, compliance and legal structures and market positioning.

    In his remarks, managing director, Investment One VenCap, Dr. Ore Sofekun, noted that for Nigeria to achieve the desired economic growth, there must be a shift from being a consuming nation to a producing nation. Investment One VenCap is the private equity and venture capital subsidiary of the financial services group.

    She pointed out that for a country with Nigeria’s population size, SMEs is one of the growth engines.

    She added that the seminar was held in line with the group’s commitment to providing financial education to both individuals and businesses, helping them to achieve their desired financial goals.

    Chairman, Networks Business Club, Mr Ernest Obi, explained that the event was borne out of the identified needs of their members who have businesses at different stages of either inception or growth and for whom financial advice was required to achieve the desired result.

    According to him, the objective of the event was to provide business owners with a platform to directly engage investors.

     

     

  • Tax Evasion: Lagos seals six companies

    Tax Evasion: Lagos seals six companies

    The Lagos State Internal Revenue Service (LIRS) on Thursday sealed up six companies for non remittance of taxes due to the state government totaling over N50million.

    The defaulting companies (Nicon Town Management Company with a tax liability of N36,053,652.89, Marketing Mix and Company Limited with a liability of N10,712,914.15, Hope Valley International Clinic with a liability of 2,389,885.28, BEC Consultants Nigeria Limited with a tax liability of N792,563.47, Goldmine Global Services Limited owing N505,812.73 and Brown Brommel Limited with a liability of N368,159.63) owed the Lagos State Government money for periods ranging from one to five years (2007 to 2012).

    A statement signed by the Executive Chairman of LIRS, Mr. Olufolarin Ogunsanwo, said the companies were sealed in pursuant to the provisions of Section 104 of the Personal Income Tax Act 2004 LFN (as amended in 2011) and will not be re-opened for business until all unremitted taxes are paid to the State Government.

    He also warned defaulting companies, especially employers of labour that the State Governor, Mr. Akinwunmi  Ambode has zero tolerance for tax evasion, adding that LIRS is set to begin criminal prosecution of all tax defaulters in Lagos State to ensure that culprits are made to face the full wrath of the law.

    The LIRS boss said that under the Personal Income Tax Act, a taxable person is statutorily required to file a return of income for the preceding year at the expiration of 90 days from the commencement of every year of assessment, whilst any employer of labour is required to file all emoluments paid to its employees for the preceding year, not later than 31st of January each year.

    “In addition to that, employers will also be required to furnish the LIRS with the salary projection of all staff for the current year. The implication of which is that a taxable person or corporate organisations who have not filed their tax returns with LIRS by the stipulated date is in breach of the provisions of the law, which is a criminal offence that is punishable under the tax laws,” he said.

    He listed such infractions to include, non deduction of taxes (PAYE, Withholding tax etc), non remittance of PAYE taxes deducted from employees, non deduction/remittance of taxes by casual workers, non-filing of tax returns at the stipulated statutory period, under declaration of income, concealment of relevant information (Income, fringe benefits etc) with a view to evading tax, failure to process Electronic Tax Clearance Certificate (e-TCC) cards for employees as a result of non remittance of tax deducted from their emoluments.

    Ogunsanwo explained that the LIRS has spent the last ten years on advocacy, publicity and enlightenment programmes on the statutory obligations of the citizenry to voluntarily comply by paying their taxes promptly as prescribed in the constitution of the country and the applicable tax legislations, but in spite of the efforts, many corporate organisations and individuals still engage in several infractions.

    He however thanked those who have continued to express their unalloyed support to the Lagos State Government by performing their civic duties; stressing that these voluntarily compliant taxpayers are seen as partners in progress, who through the prompt payment of their taxes  empower the State Governor, Mr Akinwunmi Ambode to actualize his developmental agenda of infrastructural renewal, sustainable, habitable and safe environment, multimodal transportation network, qualitative healthcare, education, agricultural development and an investment friendly environment amongst others.

    He said the law is clear on issues bordering on tax evasion just as he reiterated that the LIRS will continue to take full advantage of the provisions of the law to prosecute recalcitrant corporate organisations and individuals without further notice.

  • More French companies may list on Stock Exchange

    More French companies may list on Stock Exchange

    Nigeria will soon have more leading French companies investing in its economy and actively involved in the stock market as French business group Mouvement des entreprises de France International (MEDEF) prospects for new investments in Nigeria.

    Chairman, MEDEF, Mr. Pierre Gattaz, who made his first visit to Africa to Nigeria last week, led a group of some 50 French businessmen for familiarisation with the economy and preliminary discussions on prospective business areas and partners.

    Gattaz, during a visit to the Nigerian Stock Exchange (NSE), said many French companies would soon toe the line of Total Nigeria and Lafarge Africa Plc, two French companies that are quoted on the NSE.

    “This is our first visit and we know all these 50 business personalities who are with me are very motivated. They are very happy with what they have seen in this country. So, I think there will be more Totals and Lafarges coming in,” Gattaz said.

    He noted that French companies would be interested in bringing their capital and expertise in helping Nigeria to solve its infrastructure and basic amenities challenges. The areas of investments would include infrastructure, water, agriculture, energy, jobs, knowledge and training.

    “All those things can be brought by most of the French companies. So, this visit is the first of a long-lasting partnership with your country. There are a lot of things to be done between the two countries. That is why we are and we are very much ready to see the development of Nigeria; to see the growth of the population, and the growth of Gross Domestic Products (GDP),” Gattaz said.

    While acknowledging that the completion of the investment process may take some time, he assured that French businessmen have positive impressions about the Nigerian people and the economy.

    Both Total Nigeria and Lafarge Africa Plc have been making additional investments to strengthen their Nigerian operations in recent years. Total Nigeria plans to step up its business diversification programme by investing further in solar power business while consolidating the safety and efficiency of the current business.

    Chairman, Total Nigeria Plc, Momar Nguer, said the company is  seeking new ways to expand its offerings and the company is implementing strategies to ensure that the company remains brand of reference and leading energy solutions provider.

    “We plan to increase the number of our solar powered stations this year by eight additional stations and will be introducing our offer of solar home system. The solar home system is a solar power driven energy solution for homes,” Nguer had told shareholders in June, this year.

    He said the company would be seeking to align its business and structures with the dictates of the environment in which it operates and through all these, create sustainable value for all the shareholders.

    Lafarge Africa this month completed the acquisition of 30 per cent equity stake in United Cement Company of Nigeria (Unicem) Limited from Flour Mills of Nigeria Plc. Nigerian Cement Holdings BV (NCH), a 50 per cent affiliate of Large Africa, completed the acquisition of the second tranche of 15 per cent in Unicem, making the company a wholly-owned subsidiary of NCH. NCH had in March, this year acquired the first tranche of 15 per cent stake in Unicem from Flour Mills of Nigeria.

    With this final acquisition, NCH now owns 100 per cent of Unicem and consequently Lafarge Africa now owns 50 per cent of the equity of Unicem.

    Lafarge Africa plans to use Unicem to further deepen its geographical strength in the Southsouth axis. Unicem’s operational office is located in Calabar and its manufacturing plant is in Mfamosing, Cross Rivers State. It has a cement production capacity of 2.5 million metric tonnes per annum (Mtpa) and it is developing a second production line of 2.5Mtpa. The second production line is targeted to be commissioned in 2016 to bring Unicem’s total production capacity to 5.0Mtpa.

     

    The board of Lafarge Africa had rationalized the acquisition as part of the cement group’s continued investment in Nigeria to accelerate the growth and development of its business, with a focus on serving its customers and delivering value through provision of innovative products and services with a strong geographical spread.

    Lafarge had in July 2014 consolidated its cement businesses in Nigeria and South African to create a leading sub-Saharan building materials giant to be known as Lafarge Africa Plc. The consolidation was done by transferring Lafarge’s assets in South Africa and Nigeria to Lafarge Cement Wapco Nigeria Plc, which was subsequently rebranded as Lafarge Africa.

    Under the transaction, Lafarge Group transferred its direct and indirect shareholdings in Lafarge South Africa Holding Limited of 72.4 per cent and its equity stakes in three other cement companies in Nigeria-United Cement Company of Nigeria Limited, 35 per cent; Ashaka Cement Plc, 58.61 per cent and Atlas Cement Company Limited, 100 per cent to Lafarge Wapco for a cash consideration of $200 million and the issuance of some 1.4 billion Lafarge Africa shares to the Lafarge Group.

    The new group managing director, Lafarge Africa, Mr. Peter Hoddinott, who resumed in July 2015, wears two caps as group managing director of Lafarge Africa and area manager for the LafargeHolcim business in the West African region. His main mandate included acceleration of the global cement group’s expansion plan in Nigeria and the West African region.

    Hoddinott’s appointment was said to be in furtherance of Lafarge’s long-term agenda for Nigeria as the focal point of its business within the region and the continent. The new group managing director is expected to deepen the existing businesses of the Lafarge Africa, introduce new businesses and drive the group’s capital investments.

    After it successfully combined its operations in South Africa and Nigeria to create Lafarge Africa, Lafarge had revealed plan to double its production capacity in Nigeria as part of a new expansion programme that would see additional investments by the foreign majority shareholders in its Nigerian subsidiaries.

    Lafarge, which had increased its capacity from 3.0 million metric tonnes to 8.0 million metric tonnes, said it would be making new investments in the next few years to double its capacity and strengthen its position as a leader in the Nigerian cement industry.

  • ‘Multiple taxes weighing down companies’

    THE Director-General, Manufacturers Association of Nigeria (MAN), Remi Ogunmefun, has described as scandalous the unprecedented level of taxes levied against manufacturing companies operating in the country, saying the development is a disincentive to business.

    He noted that manufacturers are already overburdened by a lot of challenges including limited infrastructure, which is why it is unthinkable that they are continuously being overstretched.

    “I can tell you without mincing words that many manufacturing companies in the country today pay one form of levy or the other to at least 25 agencies, including federal, state and local government. This is killing. How can manufacturers survive in this kind of hostile environment, it is impossible?” Ogunmefun asked.

    According to him, manufacturers are groaning under severe multiple taxation that adds to the cost of business and disrupts the manufacturing chain.

    The way forward, he said, is for the government to streamline these taxes  to encourage the growth of companies.

     

    “Many manufacturing plants we have today are no longer in business because of a number of factors, part of which includes poor operating environment and the issue of multiple taxations. There is an urgent need on the part of government to address this ugly situation,” Ogunmefun stressed.

  • Companies look to fourth quarter for capital raising

    The primary market would be quite active in the fourth quarter as many companies plan to kick off their capital raising during the period.

      The Nation’s investigation indicated that not  less than six companies night raise some N160 billion in the fourth quarter, more than N156 billion raised by eight companies in the first three quarters.

    Shareholders of UAC of Nigeria (UACN) Plc are meeting today to consider and approve additional capital raising, including offering special equity stakes to strategic investors and raising new capital through equity and debt issues. UACN plans to undertake two private placements to strategic investors while also raising capital through rights issue to existing shareholders and an unspecified new issue to the general investing public. The Nation’s investigation indicated that UACN might raise as much as N40 billion in the multi-level capital issue.

    Shareholders are expected to approve several resolutions including one that empowers the board to raise N20 billion through any means of capital raising and another resolution that mandates the board to offer some 160.07 million ordinary shares of 50 kobo each to existing shareholders on the basis of one new ordinary share for every 12 shares held as at the closure date.

    In a major strategic move, the conglomerate is seeking to undertake a private placement of 230 million convertible non-redeemable preference shares of 50 kobo each to pre-identified investors at a price of N45 per share.

    In another private placement, the board is proposing a private placement of 100 million convertible non-redeemable preference shares of 50 kobo each to pre-identified investors at a price of N50 per share.

    Under the proposed terms of private placement, the preference shares shall be convertible to ordinary shares within five years on terms to be agreed by the directors. The preference shares holders would not be entitled to dividends but they would be entitled to any distribution of assets and they can attend general meeting and vote as well.

    To facilitate the new capital issue, shareholders of UACN are expected to increase the conglomerate’s authorized share capital from N1 billion divided into 2.0 billion ordinary shares of 50 kobo each to N1.7 billion, consisting of 3.0 billion ordinary shares of 50 kobo each and 400 million preference shares of 50 kobo each.

    Already, Flour Mills of Nigeria Plc has submitted application for regulatory approval to raise N30.25 billion through a proposed rights issue. Flour Mills plans to offer 1.09 billion ordinary shares of 50 kobo each to existing shareholders at N27.50 per share.

    Stanbic IBTC Holdings Plc, the holding company for Stanbic IBTC Bank and other subsidiaries, had earlier received regulatory approval to raise N20.4 billion from its shareholders. Stanbic IBTC Holdings plans to issue 800 million ordinary shares of 50 kobo each to existing shareholders at N25.50 per share. The rights issue will be pre-allotted to shareholders in the book of the company on the basis of two new ordinary shares for every 25 ordinary shares. Stanbic IBTC Holdings’ new issue has however been placed on hold pending the resolution of ongoing investigations by financial services regulators.

    Skye Bank Plc, which had planned to raise about N30 billion in new equity funds in the third quarter, was said to be considering floating the supplementary offer in the fourth quarter.

    Group managing director, Skye Bank Plc, Mr. Timothy Oguntayo, had said the bank would be raising some N30 billion tier 1 capital, referring to new equity funds. While Skye Bank is still finalizing the details of the equity issue, there are indications that the supplementary issue will include an element of rights issue.

    Eight companies had raised N155.7 billion in the first three quarters of this year. Three banks- Diamond Bank Plc, Access Bank and United Bank for Africa (UBA) Plc accounted for a total of N103.6 billion, 66.5 per cent of the N155.7 billion. Others included Prestige Assurance Plc, which raised N1.5 billion and Sovereign Trust Insurance Plc, which sourced N1.14 billion from existing shareholders.

    Head, financial advisory group, GTI Capital Group, Mr. Hassan Kehinde, said the primary market might be more active in the latter part of the year as issuers take advantage of expected improvement in the market outlook in the fourth quarter.

    He said rights issue would continue to account for larger part of new equity raising. Rights issue gives the first right of refusal to existing shareholders and thus preserve existing shareholding structure. It however provides window for new investors to buy into the company through rights trading on the secondary market.

    Chief executive officer, Finawell Capital Limited, Mr. Tunde Oyekunle, said the preference for rights issue might not be unconnected with the lingering apathy and erosion of investors’ confidence that arose from market downturn in 2007, which has continued to haunt the primary market.

    He said some companies are also mindful of the shareholding dilution that may likely come from public offers while management of some companies feel existing shareholders will understand management strategy and trust their investment with them than new shareholders.

    “Most companies are embarking on rights issues due to the certainty that they can raise the required funds from existing investors, particularly the institutional shareholders and some large bloc holders who may be fully committed to retain their shareholding positions in the companies. Those shareholders will definitely have a buy in into such rights issues before they are floated. Another reason is that public offers may not necessarily get patronage or commitment from new investors due to the current state of the market,” said Sewa Wusu, economist and head of research and investment advisory at Sterling Capital Markets Limited.

     

  • Shock as Rep withdraws motion to probe treatment of Nigerians by foreign companies

    The House of Representatives was denied the opportunity of intervening on the reported inhuman treatment Nigerians working in some foreign companies operating in Nigeria were subjected to.

    A motion to address the issue entitled: ‘Urgent need to curb unwholesome practices of Chinese, Indian and Lebanese companies in Nigeria, was withdrawn by the sponsor, Segun Adekola (PDP, Ekiti).

    To the surprise of some lawmakers, who were prepared for the debate, Adekola took the leave of the House to withdraw the motion.

    The motion was listed third for debate on the Order paper yesterday.

    In accordance with House rules, the Speaker, Yakubu Dogara granted the request.

    In his argument of the motion, as contained on the Order paper, the lawmaker said a media report on an incident at Wempo where it was alleged that a Nigerian worker’s head got smashed by a faulty machine at Wempo called for concern.

    The lawmaker regretted that incidents of nonchalance to Nigerian workers’ welfare is rampart with foreign companies operating in the country, with less than impressive action from relevant authorities.

    He argued that some of the foreign companies have little regard for the safety of their workers, many of whom had died or got maimed in the work place due to gross negligence by the companies managements.

    As stated on the Order paper, the lawmaker expressed concern that some of the foreign companies act with impunity by subjecting their workers to degrading working conditions and a near absence of safety measures in flagrant disobedience of Nigerian Labour laws.

    In his prayers, Adekola wanted the House to mandate the Committee on Labour, Employment and Productivity, when constituted to investigate the incident at Wempo and other unwholesome practices of foreign companies operating in Nigeria with a view to bringing an end to the unhealthy trends.

  • Consumers reject price hike by companies

    Consumers reject price hike by companies

    Consumers have rejected companies’ plans to increase prices in a rare show of their economic power.

    According to Standard Chartered Bank (SCB) Chief Economist Razia Khan, firms are finding it difficult to pass price increase to consumers amid increased pressure on their profit margins.

    This is contained in the bank’s Business Sentiment Indicator (BSI) released on Monday.

    Khan said headline inflation for June might increase to 9.1 per cent from nine per cent last May.  If accurate, this will be the seventh consecutive monthly increase in inflation since November last year, and the highest level in two years.

    “We believe the softer BSI for June indicates ongoing economic challenges. Inflation is likely to remain a problem. Despite weak demand, with firms reporting some difficulties in passing price increases on, input prices reached a new series high in June. Rising costs continue to pressure margins. Moreover, businesses still point to weak foreign exchange (forex) availability as a constraint on activity,” Khan said.

    The BMI showed that the prices received indicator fell by 5.2 per cent month-on-month in June to 58.4 from 61.6 in May, indicating a still-weak demand environment. Future expectations also dropped to its lowest level since January 2015, down 2.4 per cent month-on-month to 61 per cent.

    “Price pressures in Nigeria have been increasing in recent months, with forex depreciation adding more pressure. Current conditions reached a new series high for the third consecutive time in June, rising 7.6 per cent month-on-month to 82.1. In contrast, firms appear less concerned about future inflation risks. The future expectations index fell to only 50.4,” she said.

    Khan said with the impact of a weakening naira expected to continue to feed into higher prices, the imposition of new forex controls for imports by the Central Bank of Nigeria (CBN) in June, is likely to drive up the prices of selected imports, and seasonal pressures in the months ahead, with the tendensy for rising inflation.

    For the economist, the BSI indicates that confidence reached its lowest level since February, suggesting that some of Nigeria’s post-election euphoria is starting to fade. “This is a new development. The bigger picture still indicates that elections and a recovery in oil prices will likely play a role in lifting sentiment in the second quarter. The three-month average BSI reading of 61 for the second quarter is consistent with some economic recovery, up from the slightly weaker 59.2 in first quarter. Both prints are lower than the average of 63.3 in 2014, when oil prices were higher,” she said.

    She said recovery in the second half of the year is plausible, adding: “This is consistent with our thinking that 2015 will be a ‘year of two halves’ for the Nigerian economy, with a weak first half giving way to more robust activity in second half.”

    For her, the strength of the future expectations indicators in Nigeria suggest that businesses remain optimistic on the likelihood of an economic turnaround.

    “Most future expectations indicators are holding up well above the 50 break-even level, suggesting businesses continue to anticipate the resumption of stronger growth even now, despite the economy’s many challenges,” she predicted.

    For instance, firms are still optimistic about near-term financial conditions. Also, companies reported slightly more optimistic financial positions in June. The current conditions indicator increased 1.6 per cent to 74.6 in June from 73.4 in May. Future expectations reached a new series high of 97.6.

    However, interest rates paid remained unchanged. The current conditions indicator for interest rates paid fell 1.4 per cent to 57.4, continuing the trend seen in May. This was despite the harmonisation of the public and private cash reserve ratios by the CBN, a move interpreted as a modest tightening of policy. The future expectations indicator rose slightly, up 0.8 per cent to 52.7.

    She predicted that further forex restrictions for 41 different import categories, announced by the CBN in late June will likely lead to further deterioration in this month. “The future expectations indicator remains just above the 50 level, at 51.6, signaling that Nigerian businesses are still optimistic about an eventual re-opening of the interbank forex market,” she said.

     

  • 11 companies ordered to dilute majority equity stakes

    11 companies ordered to dilute majority equity stakes

    The Nigerian Stock Exchange (NSE) has directed the boards of 11 quoted companies to restructure their companies’ issued share capital to dilute the existing concentrated shareholdings of the core investors and allow more investments from the general investing public.

    In the latest report on public shareholding status of quoted companies obtained by The Nation, the NSE indicated that 11 companies are currently below the minimum thresholds of public shareholding in violation of the listing requirement, which compels companies quoted on the main board of the NSE to ensure that a minimum of 20 per cent of its issued shares is in the hand of the general investing public.

    Companies listed on the Exchange are required to maintain a minimum free float for the set standards under which they are listed in order to ensure that there is an orderly and liquid market in their securities. The free float requirement for companies on the main board is 20 per cent while companies on the second board, otherwise known as Alternative Securities Market (ASEM) are required to have 15 per cent free float.

    Free float, otherwise known as public float, refers to the number of shares of a quoted company held by ordinary shareholders other than those directly or indirectly held by its parent, subsidiary or associate companies or any subsidiaries or associates of its parent company; its directors who are holding office as directors of the entity and their close family members and any single individual or institutional shareholder holding a statutorily significant stake, which is 5.0 per cent and above in Nigeria.

    Thus, free float’s shares do not include shares held directly or indirectly by any officer, director, controlling shareholder or other concentrated, affiliated or family holdings.

    The 11 defaulting companies included Transcorp Hotels Plc, Dangote Cement, Union Bank of Nigeria, Capital Hotel, Great Nigeria Insurance, Chellarams Plc, Aluminium Extrusion Industries, AG Leventis, Interlink Technology, Infinity Trust Mortgage Bank and Nigerian Ropes Plc.

    The report indicated that Dangote Cement currently has 9.07 per cent of its issued shares in the hands of the general investing public while Chellarams and Nigerian Ropes have 14.87 per cent and 13.96 per cent respectively. Capital Hotel currently has 2.23 per cent of its issued shares in the hands of the general investing public, implying that the core investors will need to sell down about 17.77 per cent to the general investing public or undertake a dilution through new capital issue. Union Bank has a free float of 14.94 per cent, Great Nigeria Insurance currently has 16 per cent, Aluminium Extrusion has 17.55 per cent, AG Leventis has a subsisting float of 11.64 per cent, Interlink Technology has 14.26 per cent while Transcorp Hotels has 10.80 per cent free float.

    According to the report, the management of the NSE has given the 11 companies deadlines to restructure their share capital. The deadlines for the companies are Transcorp Hotels Plc, December 31, 2015; Dangote Cement, October 26, 2016; Union Bank of Nigeria, June 30, 2017; Capital Hotel, April 20, 2016; Great Nigeria Insurance, July 8, 2016; Chellarams Plc, July 8, 2016; Aluminium Extrusion Industries, April 3, 2015; AG Leventis, March 3, 2017; Interlink Technology, December 31, 2015 while the Infinity Trust Mortgage Bank has not been decided.

    However, Nigerian Ropes, whose deadline expired on January 01, 2015, has indicated that it would pursue voluntary delisting from the stock market rather than dilution of the majority shareholding.

    The deadlines are in deference to application by the managements of the companies for some period to comply with the free float. However, the companies are required to provide quarterly disclosure reports to the NSE on the efforts being made to fully comply by the deadline.

    By the expiration of the deadline, the companies are mandatorily required to have completed partial divestments or dilution of the ‘non-public’ shareholdings to free 20 per cent equity stake for public holding, unless the management of the NSE grants fresh waivers and extensions for the companies. In the extreme instance, a company with deficient public float may opt to delist its shares.

    Stock markets maintain minimum public float to prevent undue concentration of securities in the hands of the core investors and related interests, a situation that can make the stock to be susceptible to price manipulation. Besides, it provides the general investing public with opportunity to reasonably partake in the wealth creation by private enterprises.

  • Eight companies to raise N180b as core investors stake more funds

    Eight companies to raise N180b as core investors stake more funds

    The new issue market promises to be quite active in the second half as eight companies have initiated plans to raise about N180 billion as core investors signalled they would be providing additional funds to support their companies.

    Regulatory filings and investment banking data obtained by The Nation indicated that not less than eight companies have started plans to raise new funds, with nearly 60 per cent already at the initial regulatory approval stage.

    The largest chunk of the new funds, according to the data, will be raised through equity issues, while some 15 per cent of the value may be through debt issues.

    Also, about three-quarters of the new issues are expected to be in form of rights issue, a supplementary equity issuance under which shares are pre-allotted to existing shareholders. All the companies undertaking rights issue have substantial majority core investors, who are expected to provide in most instances more than a quarter of the new equity funds.

    Rights issue gives the first right of refusal to existing shareholders and thus preserve existing shareholding structure. It however ,provides window for new investors to buy into the company through rights trading on the secondary market.

    Chief executive officer, Finawell Capital Limited, Mr. Tunde Oyekunle, said the preference for rights issue might not be unconnected with the lingering apathy and erosion of investors’ confidence that arose from market downturn in 2007, which has continued to haunt the primary market.

    He said some companies are also mindful of the shareholding dilution that may likely come from public offers while management of some companies feel existing shareholders will understand management strategy and trust their investment with them than new shareholders.

    “Most companies are embarking on rights issues due to the certainty that they can raise the required funds from existing investors, particularly the institutional shareholders and some large bloc holders who may be fully committed to retain their shareholding positions in the companies. Those shareholders will definitely have a buy in into such rights issues before they are floated. Another reason is that public offers may not necessarily get patronage or commitment from new investors due to the current state of the market,” said Sewa Wusu, economist and head of research and investment advisory at Sterling Capital Markets Limited.

    Lt. Gen. Theophilus Danjuma (rtd ), the chairman and major core investor in May & Baker Nigeria, is taking the lead in the recapitalisation of the healthcare company. Danjuma, a multi-billionaire, holds the largest equity stake of 24.38 per cent in May & Baker Nigeria through his company, T.Y Holdings Limited.

    There are strong indications that Danjuma, who had earlier extended N2 billion bail-out to the company, might consider providing additional equity funds beyond his pre-allotted shares to bolster the success of the rights issue.

    He told other shareholders last month that the board of the company had decided to opt for rights issue and delay the offer till now to enable all shareholders pick their rights in line with the company’s commitment to equitable and fair treatment of shareholders who had stood by the company through thick and thin.

    Shareholders had earlier in 2014 approved a resolution authorizing the company to raise additional N3.2 billion. The shareholders also empowered the directors to decide on absorption of excess monies from the new capital issue.

    The new capital issue would be for the “purposes of enhancing the company’s working capital and financing the development of the company’s businesses”.

    To create headroom for the new capital issue, shareholders also increased the authorised share capital of May and Baker Nigeria from N1 billion, consisting of 2.0 billion ordinary shares of 50 kobo each, to N1.90 billion, consisting of 3.8 billion ordinary shares of 50 kobo each, by creating additional 1.80 billion ordinary shares of 50 kobo each. May & Baker currently has 980 million issued shares outstanding on the Nigerian Stock Exchange (NSE).

    Flour Mills of Nigeria Plc, Nigeria’s most capitalised and largest flour-milling company, plans to raise about N40 billion from existing shareholders as the flour miller seeks to consolidate recent investments and support ongoing corporate restructuring with long-term funds.

    A regulatory filing indicated that the board of directors of Flour Mills has called shareholders to an extraordinary general meeting next month to discuss and approve resolutions on increase in authorised share capital of the company and a rights issue.

    The board of director is proposing increase in authorised share capital of the company from N2 billion to N2.5 billion through the creation of additional 1.0 billion ordinary shares of 50 kobo each.

    The company then plans to raise up to N40 billion in new equity funds from existing shareholders. In the event of under-subscription, the board is seeking shareholders’ mandate to allocate unsubscribed rights’ shares to interested investors.

    Shareholders are also expected to empower the board of directors to use net proceeds of the rights issue to meet the funding requirements of the company.

    As banks continue to preempt future changes in capital requirements, deposit money banks are expected to be among the major players in the new issue market in the second half. Two of Nigeria’s strategically important banks (SIBs), Stanbic IBTC Holdings Plc and Skye Bank Plc, are raising new equity funds in the second half.

    Stanbic IBTC Holdings Plc, the holding company for Stanbic IBTC Bank and other subsidiaries, plans to raise N20.4 billion from its shareholders. A regulatory filing indicated that Stanbic IBTC Holdings would be issuing 800 million ordinary shares of 50 kobo each to existing shareholders at N25.50 per share. The rights issue will be pre-allotted to shareholders in the book of the company on the basis of two new ordinary shares for every 25 ordinary shares held by the close of business yesterday.

    Skye Bank Plc plans to raise about N30 billion in new equity funds in the third quarter. It had earlier indicated it could raise as much as N50 billion, an amount still within the range of the latest offer value of N30 billion in the event of a provision for absorption of excess monies.

    Group Managing Director, Skye Bank Plc, Mr. Timothy Oguntayo said the bank would be raising some N30 billion tier 1 capital, referring to new equity funds, in the third quarter.

    While Skye Bank is still finalising the details of the equity issue, there are indications that the supplementary issue will include an element of rights issue.

    Presco Plc, a palm oil plantation and processing company, has commenced the process to raise some N3 billion new equity funds from its major core investor and other minority shareholders to reorganise its highly leveraged capital structure.

    Sa Siat nv, which holds 60 per cent majority equity stake in Presco, will provide nearly two-thirds of the rights funds. First Inland Bank/Fidelity Finance Company (TRDG), which holds 8.0 per cent equity stake, is expected to provide the second largest chunk of the funds. Presco has some 9,415 shareholders with the largest group of shareholders holding small units within the range of 1000 to 10,000 shares.

    Sterling Bank Plc, which had raised some N19 billion new equity funds through special placement late last year, and Wema Bank Plc, are also said to be considering further capital raising. Wema Bank Plc also plans to raise $100 million in tier II capital,