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Tag: firms

  • Two firms partner on safety equipment

    TO  further promote safety in the oil and gas industry, Red Wing Shoe Company, a United States-based global leader in the manufacture of safety shoes and garments, has opened an ultra-modern depot and office complex in Lagos.

    The facility, which is operated in partnership with Future Concerns Nigeria Limited, is the first of its kind in Africa.

    Speaking at the inauguration in Lagos, the Managing Director, Redwing Shoe Company, Mr Tito Warren, said the partnership with Future Concerns, which have culminated in the new facility, was meant to deepen the level of services the company has been delivering to the country’s oil and gas industry over the years.

    H said: “This major step is our first direct investment in Africa in our over 107 years of existence as a company. We recognise the need to play better, not only in the Nigerian market, but also in Africa. That’s why we are opening this facility. Our desire is to provide customised safety equipment for workers in the oil and gas industry.

    “Our company has a track record of innovation and satisfying the target market. Over the years, we have been providing customised equipment based on the needs of the market. We have been in Nigeria for a while through our partnership with Future concerns. By this, Future Concerns will be representing our interest in the whole of Africa. The company has worked with Redwing for many years and has earned our trust.

    “Future Concerns Nigeria Limited has achieved the highest level of representation of Red Wing by offering their quality services over the years. Therefore, it is entitled to sell all footwear, garments and accessory range of Red Wing Shoe Company and represent Red Wing brand in Nigeria.”

    He stressed that their motivation to invest in the country was not profit driven but the zeal to offer quality service in the oil and gas sector in Africa.

    Launching one of the latest safety shoes from the company’s stables at the event, Warren said the 8231 innovation has been in existence for over 107 years. He noted that what Redwing did was to improve on the quality without changing the DNA of the product.

    According to the Managing Director, Future Concerns, Tony Oguike, Red Wing decided to partner with Future Concerns to raise the bar in safety materials innovation and to offer clients first class safety equipment.

    He said: “We are glad that Redwing has agreed to partner with us in order to improve the quality of safety equipment in the oil and gas industry. We are looking forward to an exciting time with this world class company and we are sure that the country and the continent will benefit greatly from this.”

  • ‘Firms should seek profitable investments’

    Insurance companies need to seek viable and profitable investments that will protect their premiums and safeguard their balance sheet to make returns for shareholders.

    Head, Research and Investment Advisory Services, Sterling Capital Markets, Mr Sewa Wusu, gave this advice during a chat with The Nation.

    He said reinvestment into more profitable instruments would help the recovery of insurance firms listed on the Nigerian Stock Exchange (NSE).

    Noting that many investors burnt their fingers during the stock market boom, he said insurance firms were not left out and are still leaking their wounds five years after.

    He noted that invested premiums, which usually yield profits for the insurance companies to pay claims to their clients went away with bad investment that never brought back anything to the companies.

    He said that since the market is coming back and recovering gradually, the companies should be wise enough to seek better instruments that will enable them to make much profit.

    The insurance sector is recovery at the exchange. Most of the firms couldn’t pay their claims and as such, the number of operators dropped from over 70 to 50.

    At present, 29 companies are listed on the floor of the NSE; out of this 25 have been active this year while three out of the remaining four non-active companies where last traded in December last year. The other traded in July 2010.

    The stocks in the insurance sector has been struggling to break off from the nominal value (N0.50). As at Friday, 72.41 per cent were selling at N0.50 while 20.69 per cent had their price value between N0.51 and N0.82. The remaining 6.90 per cent were valued between N1.57 and N2.00 per share.

    Specifically, Mansard Insurance is the most priced in the sector with N2 followed by Custodian and Allied insurance at N1.57 per share.

    The insurance market between September 5, 2005 and February 28, 2007, deployed sundry means, including private placements, initial public offering of shares, mergers and acquisitions and formation of strategic alliance to comply with the new capital regime.

    Minimum capital requirement for life insurance capital rose by 1,233 per cent from N150 million to N2 billion; general insurance increased by 1,400 per cent from N200 million to N3 billion; while reinsurance capital rose by 2,757 per cent from N350 million to N10 billion.

    Fourteen companies were liquidated for failing to meet the recapitalisation requirement in 2004. The minimum capital requirement was raised from between N20 million and N90 million to N150 and N350 million for their classes of business.

  • Okonjo-Iweala: 50 oil firms got N232b illegally

    Okonjo-Iweala: 50 oil firms got N232b illegally

    Fifty oil marketers fraudulently collected N232 billion from the Federal Government as fuel subsidy, Finance Minister Dr. Ngozi Okonjo-Iweala said yesterday.

    The government has recovered only N29 billion through debt swap, Dr. Okonjo-Iweala, who is also the Co-ordinating Minister for the Economy, added.

    She spoke at the 18th Nigerian Economic Summit meeting in Abuja.

    According to her, a forensic investigation carried out by the government revealed the subsidy fraud.

    According to her, the government engaged 20 forensic experts, examiners and auditors from PriceWaterHouse Coopers and the Central Bank of Nigeria (CBN) and they have worked for more than four months on the subsidy claims.

    “Last week, the work was submitted to Mr. President and of the amount verified, they have determined N232 billion. You know they came out with N270 billion initially; now they are out with N232 billion claims of oil subsidy that are not substantiated or fraudulent.”

    She said on the strength of the forensic investigation, the government has started to recover the claims from the affected marketers.

    She vowed that the government would recover the cash fraudulently obtained through subsidy claims.

    Okonjo-Iweala regretted that the forensic investigation and the government’s resolve to hold indicted marketers to account have slowed down the oil importation programme.

    She, however, stressed that government has continued to pay genuine subsidy claims to petroleum marketers.

    “We are going through forensic investigation because it is the kind of work that requires indepth investigation and that is because we want to do a thorough job on the matter because Nigerians want government to take corruption out of the way so that we can be like other nations of the world where things are done properly,” Mrs. Okonjo-Iweala said.

    The presidential task force headed by Access Bank Managing Director Aigboje Aig-Imoukuede and the National Assembly probe have verified slightly more than N3 trillion , but government decided to subject the reports to forensic examinations.

    At a news conference, also in Abuja yesterday, Mrs. Okonjo-Iweala said the government had released N170 billion as cash backing for the fourth quarter of Budget 2012.

    “On the issue of cash backing for the fourth quarter; as you know, we released N300 billion last quarter for a total of N1.01 trillion in releases and it was said that we have not cash-backed the fourth quarter

    “This is not correct; we have cash-backed N170bn of the fourth quarter release. About N111billion of that has gone straight into the accounts of Ministries, Department and Agencies as cash.”

    According to the minister, a balance of N59 billion will service Authorisations to Incur Expenditure (AIEs).

    She said as at the end of October, 71 per cent had been utilised; 20 per cent is yet to be utilised.

    “So, we believe that before the end of the year, it will be utilised by the MDAs.

    “We also want to be careful not to just release funds anyhow, until we are sure of what they are being used for.

    “We have also released N44 billion to the Federal Ministry of Works in order to enable it work on the major damaged roads ahead of the Christmas season.”

    On the police pension, she said a letter had been sent to ensure that payments were continuously made to police pensioners.

    “To make sure that police pensioners are paid, we handed over the management of the account to the Accountant General of the Federation and he has been effecting payment to pensioners.

    “And he has restructured the nine accounts to four; he is managing them while the restructuring of the police pension outfit goes on.’’

    Mrs. Okonjo-Iweala, who is also the Co-ordinating Minister for the Economy, gave the assurance that a transparent police pension office capable of managing resources effectively, would be put in place.

    She reiterated the call for the sack of 50 per cent of public servants to prune down the cost of governance.

    Mrs. Okonjo-Iweala said the truth must be told that some redundant civil servants must be sacked to pave the way for good governance and to cut cost.

    Reacting to a question by one of the panellists at the National Economic Summit on what the government was doing to reduce the cost of governance, the minister said those calling for the reduction in the recurrent expenditure were invariably calling for the reduction in the work force in the civil service.

    She said it was contradictory for the public to “call for the head” of the Governor of the Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi, when he was recently according to the CBN, misquoted for calling for the sack of 50 per cent of the government workforce, arguing that the only way to prune down the cost of governance is to reduce the government’s workforce whose entitlements amount to 32 per cent of the budget.

    Her words: “On the expenditure side, you said our reduction from 77 per cent to

    about 68.8 percent is marginal, but let me tell you that there is room to

    do more and you will come to a point where you have to implement the Oronsaye Committee report and eliminate duplication.

    “We are aware that there are government agencies that are not rendering any service. But let me tell you, the targets of this fiscal tightening are human beings; they are the ones that must be eliminated to prune down the costs. The cost of personnel in the budget is 32 per cent and that is huge. So, when you get to a point of tackling the recurrent budget, it will then mean people. That is the bottom line; let us just be frank about it.

    “And the same public that is crying about cost of governance will remind you that one civil servant is catering for five other Nigerians when you really want to reduce the cost of governance. We had this hue and cry about the misquoting of Lamido and people almost called for his head, but you have to understand that when you talk about reducing cost of governance, you are ultimately talking about human beings.

    She described privatisation as robust.

    “Nigeria probably has one of the most robust privatisation programmes in the world. We have actually done a research. No country has so thoroughly privatised its power sector the way we have done in terms of the generation, distribution and management of the transmission arm all at once. Some countries and global organisations are looking into this feat as a case study.”

    Mrs. Okonjo-Iweala also expressed disappointment on the way some Nigerian do not want full deregulation of the downstream sector, adding that government can never be threatened and stopped from doing the right thing.

    The minister vowed that those indicted for oil theft would never go free without prosecution.

     

  • Govt may adjust PIB to favour oil firms

    Govt may adjust PIB to favour oil firms

    Government is proposing watering down the changes to the operations of International Oil Companies (IOCs) operating offshore in the Petroleum Industries Bill (PIB).

    The PIB, touted as a panacea to the problems in oil sector development, is undergoing legislative work at the National Assembly.

    Petroleum Minister Mrs. Diezani Alison-Madueke hinted of the proposed changes in an interview with the Financial Times of London.

    News of the planned review of the fiscal regime for the OICs came as Total said it has sold a 20 per cent stake in a Nigerian offshore oil field to China’s Sinopec in a $2.5 billion (N387.5billion) deal, which will help the French oil group fund its ambitious exploration plans.

    But the new terms for the IOCs according to the FT, are part of a long-delayed PIB.

    Mrs Allison-Madueke said the new fiscal terms were “equitable”, and would only increase the government’s total take by 7- 8 per cent. But she added that there was “room for compromise” on a planned hike in royalties for production sharing contracts offshore, and that talks with multinational companies, such as Shell, Chevron, ExxonMobil, Total and Eni were continuing.

    “They still feel we are too far apart,” said Mrs Allison-Madueke, adding “We would like to feel that at the end of the day we have some fairly median point.

    “Uncertainty over the bill has caused stagnation in the oil industry, with little spending on exploration in recent years. Production is stuck at around 2.4million barrels a day, barely half what was targeted a decade ago.

    If passed, the legislation will see the Nigerian National Petroleum Corporation (NNPC) stripped of regulatory powers and split into three companies, including a listed oil company run along commercial lines. The downstream oil sector, will be deregulated and liberalised.

    International oil companies have profited in the past from opaque rules and lax controls, and in many cases have failed to adhere to international standards on environment protection.

    Mrs Allison-Madueke said the proposed changes were still less onerous than in countries such as Angola and Indonesia.

    “We have a lot more competition in the sub-Saharan region than we had before, when we were pretty much the sole explorer and producing nation. For that fact alone, and also to keep the discourse going, we are still in discussion [with the oil companies].”

    Total according to Reuters, said yesterday it had signed a deal to sell the stake in the OML 138 block, which produces 130,000 barrels per day of oil equivalent and contains the Usan field, which started production in February.

    Sinopec, Asia’s largest refiner, has also snapped up energy assets in Britain and the United States recently to boost foreign earnings, as a slowdown in China hit profits.

    Other shareholders in the OML 138 oil block, located 100 kilometers off the coast of Nigeria, are Exxon and Chevron, with 30 per cent each, as well as Nexen, which owns 20 per cent.

    Total’s shares were up 2.5 per cent by 1500 GMT, outperforming a 2.1 per cent rise in the European oil and gas sector.

     

  • Abdulsalami’s group loses Eko, Ikeja power firms

    Abdulsalami’s group loses Eko, Ikeja power firms

    NCP gives preferred bidders 15-day ultimatum

     

    Integrated Energy Distribution and Marketing – a firm promoted by former Head of State Gen. Abdulsalami Abubakar – yesterday lost out as the core investor in the Eko and Ikeja electricity distribution companies.

    The company was named the core investor for four of the 10 electricity distribution firms (DISCOs) put up for sale by the National Council for Privatisation (NCP).

    The two are the most lucrative of the firms.

    But yesterday, when the NCP renamed the preferred bidders for the privatised firms, it gave only the Ibadan and Yola distribution firms to Integrated Energy Distribution and Marketing firm.

    NCP Technical Committee chairman Mr. Atedo Peterside announced the preferred bidders in Abuja on behalf of the Federal Government.

    Government also announced the preferred bidders of the electricity generation companies, bringing the privatisation of the power sector into a milestone.

    There are stringent conditions for the preferred bidders.

    New Electricity Distribution Company (NEDC/ICEPCO) is the preferred bidder for Ikeja Distribution Company. West Power and Gas is the preferred bidder for the Eko Distribution Company.

    Vigeo Power Consortium, besides winning the Benin Disco, is the reserved bidder for Ikeja Disco. Its contender for Benin Disco – Southern Electricity Distribution Company – was disqualified for submission of multiple bids.

    Oba Otudeko’s Honeywell Energy Resources International Limited is the reserve bidder for Eko Disco.

    Sir Emeka Offor’s Interstate Electrics Limited beat Eastern Electric Nigeria Limited, owned by the five South eastern states, which was approved as the reserved bidder for the Enugu Disco.

    The Afam Generation Company and Kaduna Distribution Company are yet to get preferred bidders.

    The five generating companies also got preferred bidders.

    The process, however, drew criticisms from some quarters.

    At the sixth meeting of the council yesterday, successful bidders were given 15 days to make financial commitments through their banks.

    The companies are expected to be handed over to the preferred bidders at the conclusion of the transaction within the next six months at which the companies are expected to have made full payment.

    Besides, NCP disqualified Southern Electricity Distribution Company for submission of multiple bids for Benin Disco.

    Amperion Power Distribution Company Limited with a bid of $132,000,000, is the preferred bidder for the core investor sale of 51% shares of Geregu Power Plc.

    Mainstream Energy Solutions Limited, which offered an annual fee of $50,760,665.18 and a commencement fee of $257,000,000, is the preferred bidder for Kainji Hydro Power Plc.

    For Shiroro Hydro Power Plc, NCP approved that North-South Power Ltd which offered an annual fee of $23,602,484.87 and a commencement fee of $111,654,534, is the preferred bidder.

    The privatisation body also approved that Transcorp/Woodrock/Sumbion/Medea/PSL/ Thomassen with a bid of $300,000,000, is the preferred bidder for the Ughelli Power Plc.

    Amperion Power Distribution Company Limited with a bid of $252,000,000 is the reserved bidder for the Ughelli Power Plc.

    CMEC/EURAFRIC Energy JV Consortium is the preferred bidder for the Sapele Power Plc. It bidded $201,000,000.

    JBN-NESTOIL Power Services Ltd, with a bid of $106,500,000 is the reserved bidder for the Sapele Power Plc.

    Amperion is the preferred bidder for Geregu Power Plc. The Feniks Electricity Limited is the reserved bidder for Ughelli Power Plc, subject to their bid being revised to match the reserved price.

    For the Distribution Companies (DISCOs) in which 60 % sales was approved, the preferred and reserved bidders are: Abuja Distribution Company: KANN Consortium Utility Company Ltd as preferred bidder; Benin Distribution Company: Vigeo Power Consortium as the preferred bidder;

    Eko Distribution Company: West Power & Gas is the preferred bidder;

    Honeywell was approved as the reserved bidder; Enugu Distribution Company: Interstate Electrics Ltd is the preferred bidder; Eastern Electric Nigeria Ltd was approved as the reserve bidder; Ibadan Distribution Company: Integrated Energy Distribution & Marketing Ltd is the preferred bidder;

    NEDC/KEPCO was approved as the reserved bidder; Ikeja Distribution Company: New Electricity Distribution Company (NEDC)/KEPCO is the preferred bidder; Vigeo Power Consortium is the reserved bidder; Jos Distribution Company: Aura Energy Ltd as the preferred bidder

    Kano Distribution Company: Sahelian Power SPV Ltd is the preferred bidder; Port Harcourt Distribution Company: 4Power Consortium is the preferred bidder; Yola Distribution Company: Integrated Energy Distribution & Marketing Ltd is the preferred bidder.

    Peterside, with whom is Mrs. Bola Onagoruwa, Director General, Bureau for Public Enterprises (BPE), at the end of the council meeting which was presided over by Vice President Namadi Sambo, said the council also approved the next steps for the conclusion of the privatisation of the generation and distribution companies.

    He said: “After the approval of the results of the financial bids by Council, the highest ranked bidder for each Generation or Distribution Company will be required to post an additional bid security (“Preferred Bidder’s Bank Guarantee”) in the form of a Letter of Credit or Bank Guarantee for 15 per cent (15%) of the transaction value within fifteen (15) business days of notification from the Bureau of Public Enterprises.

    The Preferred Bidder’s Bank Guarantee shall be from a Standard & Poor (S&P) or Moody & Fitch “A” rated foreign bank with a correspondent bank in Nigeria or a Nigerian bank rated “A” by a Rating Agency approved by SEC and be valid through 21, calendar days after the stipulated proposal validity period or any extended proposal validity period.

    “The designated Preferred Bidder will be invited for negotiations with BPE. Within 15 business days after signing of the Sale and Purchase Agreement, the Shareholders’ Agreement or the Performance Agreement ‘whichever is earlier, or at a mutually agreed earlier time, the Bidder shall make a down payment of 25% of the share purchase price.

    “Within six months after signing of the Sale and Purchase Agreement or the Shareholders’ Agreement, whichever is earlier or mutually agreed upon time, the Bidder will be required to pay the outstanding 75% of the share purchase price to complete the transaction. Upon receipt of payment, the Preferred Bidder’s Bank Guarantee will be returned to the bidder within a maximum of four weeks.

    “After the completion of payment, the handover of the successor company to the Preferred Bidder will conclude the transaction.”

     

  • Abdulsalami’s group wins Ikeja, Ibadan PHCN firms

    Abdulsalami’s group wins Ikeja, Ibadan PHCN firms

    Fed Govt makes N19.25b from sale of 10 electiricty distribution companies

    Integrated Energy Distribution & Marketing, a firm owned by former Head of State Gen. Abdusalami Abubakar emerged yesterday the core investor of the Eko, Ikeja, Ibadan and Yola electricity distribution companies.

    The Federal Government raked in N197.25billion from the sale of its 60% equity in 10 of the 11 electricity distribution companies (DISCOs) in the unbundled Power Holding Company of Nigeria (PHCN).

    The Chairman of the Technical Committee, National Council on Privatisation (NCP), Mr. Atedo Peterside, broke the news in Abuja during the opening of the commercial bids of the privatisation of PHCN successor distribution companies.

    In the case of Kaduna Distribution company, he noted, “neither of the two bids received was technically qualified”.

    “Therefore, the Bureau of Public Enterprises (BPE) will invite fresh bids from all the pre-qualified bidders, in accordance with the ‘Plan’ approved by the NCP in respect of the privatisation of any unsold successor company. Plan B entails inviting fresh bids from all the shortlisted bidders that paid the required $20,000fee for the bid documents.”

    Peterside, who presided over the bidding, explained that there was an adoption of Aggregate Technical, Commercial and Collection (ATC&C) loss Reduction for the choice of the core investors.

    He added: “I wish to comment on the choice of the ATC&C loss reduction proposal as a basis for core investor selection. The use of this method for the selection of core investors for distribution companies is a clear departure from the NCP’s usual practice of awarding companies to the bidder who makes the highest financial offer to purchase an asset after being technically qualified. Furthermore, ATC&C loss level will provide Nigerian consumers and other stakeholders with specific parameters with which to measure the outcome of the power sector reform and privatisation.”

    Intergrated Energy Distribution & Marketing Limited won the bidding with 22.51% ATC&C. Its closest bidder, KEPCO, offered 21. 43% ATC&C.

    Gen. Abubakar is the chairman, Integrated Energy Distribution & Marketing Limited, which also won the bidding for Eko Distribution Company with 21.43% ATC&C. KEPCO offered 20.43% ATC&C.

    Integrated Energy Distribution Company&Marketing Limited won the bid for Ibadan Distribution Company with 17.46% ATC&C. Western Consortium bidded 14.37%ATC&C.

    The bid for Enugu Distribution Company was won by Interstate Electrics Nigeria Limited, which offered 20.83%. Its only rival Eastern Electric Nigeria (EEN) Limited, offered 15.99% ATC&C.

    Interstate Electric Limited won the bid for Abuja Distribution Company with 21.62%. Its rival KANN Consortium Utility, offered 18.45%.

    Among the companies in the Interstate Electric Limited is Mr. Emeka Offor’s Chrome Group.

    For the Benin Distribution Company, Vigeo Power Consortium won the bid with an offer of 21.78%. Southern Electricity Distribution Company offered 17.72% AT&C.

    Gbolade Osibodu is the promoter of Vigeo group.

    The only bidder for Jos Distribution Company, Aura Energy Limited, won with 16.22% ATC&C.

    Sahelian Power SPV Limited won the bid for Kano Distribution Company with 22.12%. Integrated Power Distribution & Marketing Limited won the bid for Yola Distribution Company with 18.58%.

    In the case of Port-Hacourt, 4Power Consortium emerged core investor, with 19.55%.

    Companies that make up Sahelian Power SPV Limited that won Kano Electricity Distribution Company include Sahelian Energy & Integrated Services Limited; Kayseri Ve Civari Elektrik T.A.S (KCETAS); Dantata Investment and Security Company Limited; Incar Power Limited; and Highland Electricity Limited.

    For Aura Energy Limited, which is the preferred bidders for Jos Electricity Distribution Company, the consortium is made up of Aura Energy Limited and Aydem Elektrik Dagitim A.S. of Turkey.

    The 4Power Consortium, which is the preferred bidder for Port Harcourt Distribution Company has nine companies in the consortium including Taleveras Group of Companies Limited; Lilleker Brothers (Nigeria); Income Electrix Limited/CESC Limited Joint Venture; Skyview Power Technologies Limited; First Independent Power Company Limited; Akwa Ibom Investment and Industrial Promotion Council (AKIIPOC); Paradise Power Nigeria Limited; Bayelsa Electricity Company Limited; and CESC.

    According to Peterside, to qualify to have its commercial bid opened, each bidder was required to furnish, within 15 business days, official notification of its technical qualification, a post-qualification security in the form of a bank guarantee or a letter of credit.

    He noted that for Yola and Jos distribution companies, the post-qualification security required from each bidder is $5million.

    The chairman also noted that bidders for Benin, Eko, Enugu, Ikeja, Kano and Port-Hacourt distribution companies were expected to submit $10million bank guarantee or letter of credit. $15milliin is required for bidders from Abuja and Ibadan distribution companies.

    Continuing, he said “I am very glad to report that many bidding consortia for the distribution companies, whose commercial bids are opened today, include owners and operators of some of the most successful and efficient electricity distribution companies operating elsewhere in the world,” Peterside said, adding:

    “Nigerians should be comforted and pleased to know that it would be difficult to assemble a more qualified group of bidders for our distribution companies today other than the consortia that we have present in this room.“

    Director-General Ms Bolanle Onagoruwa said in the distribution sector, the government focused less proceeds from asset sales, even though it would receive substantial proceeds.

    She said: “We have emphasised the need for preferred bidders to display the ability to immediately bring in investments that will remove the high losers profile of all the 11 distribution companies.”

    The Minister of State for Power, Mr. Darius Ishaka, advised the loser to take advantage of other opportunities in the sector.

    Chairman of the Senate Committee on Privatisation, Senator Gbenga Obadara, noted that the business model of the winners must fit what they bid for.

    “We will not give these companies to incompetent people,” Obadara said.

  • Market recovery: Firms revive fund raising plans

    Market recovery: Firms revive fund raising plans

    Many companies that had shelved earlier plans to raise new capital from the capital market due to the lingering recession have restarted discussions about prospects of accessing new equity funds from the market.

    Investment banking sources said there were indications of renewed interests in the new issue market following sustained recovery in the stock market, which has seen considerable restoration of equities’ values and investors’ confidence in recent period.

    They indicated that ongoing discussions could lead to debut of early new issues in the market around the first quarter of 2013 if the market sustained its ongoing recovery.

    Market sources said although the talks were still not definitive, the discussions pointed to imminent rebound of the new issue market.

    From a whooping N1.3 trillion in 2007, the recession that started in 2008 had withered enthusiasms for new issues, especially equities, as new issues dropped to about N86 billion in 2009. It has since declined consecutively with the few new equity issues in recent years – largely rights issues motivated by large core investors seeking to recapitalize their companies.

    Companies were however, said to be considering that the positive sentiments from the secondary market recovery would impact on new equity issues.

    Reports by boards of directors of several companies had indicated that companies were constrained by their inability to source new equity capital due to the meltdown at the capital market while recourse to high-interest bank loans depressed probable returns to shareholders.

    Reports by quoted companies highlighted the twin-problem of high cost of fund and liquidity squeeze on corporate earnings.

    Several companies had earlier indicated plans for supplementary equity issues and initial public offering (IPO) but suspended the plans due to what they described as unfavourable situation at the primary market.

    Not less than 11 companies had earlier indicated interests in raising new equity funds. These included companies such as Cement Company of Northern Nigeria (CCNN), May and Baker Nigeria, Fidson Healthcare, RT Briscoe, DN Meyer, Nigerian Aviation Handling Company (Nahco), Lafarge Wapco Cement Nigeria Plc and UACN Property Development Company (UPDC) Plc. Two prospective new listings- Promasidor Nigeria Limited and Notore Chemical Industries Limited had also mulled plans to float IPOs.

    Many banks were said to be considering proactive fund-raising plans to boost their lending capacity and forestall adverse impact from global and domestic regulatory changes.

    Many banks have subsisting shareholders’ resolutions to raise new funds through equity and debt issues.

    Most of the companies had already intimated shareholders of the necessity of accessing new funds while many have started and completed some key steps in the new issue process. Already, CCNN had secured shareholders’ approval to raise N45 billion. The company had gotten approval to raise N15 billion each through rights issue, public offer and a rights-based secured convertible debenture issue.

    This implied that the company would be seeking to raise up to N30 billion from existing shareholders while new investors and existing shareholders would contribute N15 billion. A secured convertible debenture would give opportunity to debenture holders to choose to convert their holdings to ordinary shares at a later date.

    While some of the companies plan to use net proceeds of their offers for business expansion, most of the companies would use the funds to restructure their balance sheets by reducing bank loans and providing additional working capital to support long-term growth.

    CCNN was planning to raise funds to finance expansion while Promasidor and Notore plan to use net proceeds of their IPOs to partly finance its new factory.

    Notore plans to raise more than N160 billion. The net proceeds from the IPO would be used to finance a brand new fertilizer plant, with a conservative estimated cost of $1 billion. The new fertilizer plant was part of the company’s expansion programme, which aimed to build new capacity to support the current attainable capacity of the existing plant of 750,000 metric tonnes.

  • Cornerstone, Linkage others mull merger option

    • Director, Corporate Relations, Guinness Nigeria Plc, Mr Sesan Sobowale; Managing Director, Mr Seni Adetu; Chief Economic Adviser to the President, Dr Nwanze Okidegbe, and Special Assistant to Chief Economic Adviser, Dr Ogho Okiti, during a courtesy visit by the Managing-Director to the Economic Adviser in Abuja.

    About six insurance firms are engrossed in merger talks to boost their performance, The Nation has learnt.

    Last week, the
    (NSE) said it received a proposed merger plan between Cornerstone Insurance Plc and Linkage Insurance Plc.

    Mr Wole Tokede, the spokesperson, in the weekly activity summary, said the institutions had notified The Exchange of their proposal to merge into one.
    The Exchange said the merger would result in the transfer of assets, liabilities and undertakings, including real property and intellectual property rights of Linkage Insurance Plc to Cornerstone; and the cancellation of the issued shares of Linkage.
    The Exchange said: “The application for the merger which is under consideration will however result in the transfer of all assets, liabilities and undertakings, as well as real property and intellectual property rights of Linkage Insurance Plc to Cornerstone Insurance Plc, the shareholders of the Scheme Shares of Linkage Insurance Plc so cancelled will be entitled to 30 per cent shareholding (approximately 74 percent of the current shareholding in Linkage) of Post-Merger Cornerstone Insurance Plc.
    Commissioner for Insurance Fola Daniel, who confirmed the merger plans, said several firms were fine-tuning theirs. He said the new twist by operators aligned with the National Insurance Commission (NAICOM) transformation programme.
    He noted that the commission over the years has been striving to grow companies that can compete favourably in the global sphere.
    He lauded the merger plans of Cornerstone Insurance Plc and Linkage Assurance Plc.
    Daniel said: “We want bigger companies; we want bigger players’ not faint firms.
    The merger plans between Cornerstone Insurance Plc and Linkage Assurance Plc is in line with our reforms programme.
    “There are several companies that are looking at merger, at least there are half a dozen that are doing so presently.”
    He urged policy holders and other stakeholders to look forward to a more vibrant industry that would be made up of companies with adequate strength and consumer friendliness.
    President, Chartered Insurance Institute of Nigeria (CIIN), Dr Wole Adetimehin, said the move is to build mega companies, adding that companies have realised that they cannot harness more of the opportunities in the industry with solo effort. He noted that reforms initiated by the government and NAICOM have opened up more businesses for the industry.
    “Presently, there are some silent moves where some people are planning to merge to become mega companies,” he said.
    Director-General, Nigerian Insurers Association (NIA) Sunday Thomas, said NAICOM has put in place structures to enable companies have the required capital that can underwrite the type of risk they cover, adding that some companies have begun consultations on how to raise their capital to enable them key into the opportunities provided by the Local Content Act, especially in the oil and gas insurance business.
    “The capital base may not be adequate, but I am aware that companies that want to operate within the Local Content are making efforts to shore-up their capital. Also, NAICOM is working very hard to put in place risk-based supervision. And one of the fundamentals of risk-based supervision is risk-based recapitalisation.
    “Risk-based recapitalisation measures the type of business in relation to the capital to back-up the business. Some companies may not be there now, but they would not be allowed to operate beyond their capacity.
    I think NAICOM is doing a good job in that direction. For the industry, efforts are being made to shore-up capital and of course, there have been discussions about mergers and how companies can be bigger, because companies have realised that there is beauty in being big. If they are big, they will be able to increase their capacity to retain more businesses and that will impact the economy through job creation,” he added.

  • Furniture firm targets upscale market

    Consumer’s furniture company, Aframero Limited, exhibited some of its product recently at the just-concluded furtex international furniture, home textiles and home suppliers trade fair held in Lagos, last week.

    Aframero Limited not only supplies premium quality building and woodworking materials to the construction and furniture sector, it also provides advisory services.

    Its Managing Director, Mrs. Yetunde Oghomienor said the company was birthed to fill the gap in high quality interior finishing materials at affordable prices. She said the company’s main products include wood composite panels like medium density fibrewood, and Formica brand counter tops.

    In addition, she said their products carry the widest range of colours, finishes, and sizes.
    According to her, Aframero’s kitchen accessories include magic corner, pantry unit, pullout basket and other items that makes a kitchen beautiful and making working easier and more pleasurable.

    The company’s general manager Mr. clement Sampson describe Aframero limited as a one stop shop were you get all your furniture materials and accessories.

    On the target market she revealed that the product is targeted at professionals, specifiers in the building sectors, architects, builders, furniture manufacturers are their major target.