The Nation Newspaper

Tag: rights issue

  • Guinness Nigeria offers 5 for 11 shares in N39.7b rights issue

    Guinness Nigeria Plc would be raising N39.7 billion in new equity funds from shareholders in the book of the company as at the close of business yesterday.

    More details emerged yesterday as the board of directors of Guinness Nigeria, through its stockbroker, Stanbic IBTC Stockbrokers Limited, filed application for regulatory approval for the supplementary new issue.

    According to the regulatory filing obtained by The Nation, Guinness Nigeria will be offering 684.495 million ordinary shares of 50 kobo each to shareholders at a discounted price of N58 per share. The rights’ shares will be pre-allotted on the basis of five new ordinary shares for every 11 ordinary shares held as at March 15, 2017.

    The rights’ issue price of N58 per share represents a discount of 17 per cent from Guinness Nigeria’s last traded price of N70 per share yesterday at the Nigerian Stock Exchange (NSE). Guinness Nigeria rode on the back of the scramble to make the qualification date for the rights issue, rising by the day’s highest gain of N2 to close at N70.

    Shareholders had in January 2017 approved the plan by the board of directors of the company to raise some N40 billion new equity funds from existing shareholders.

    At the extraordinary general meeting in Lagos, shareholders passed resolutions authorizing the board of directors to proceed with the proposed rights issue, which will enable the company to raise up to N40 billion in new capital.

    Speaking at the meeting, chairman, Guinness Nigeria, Babatunde Savage, said the new equity funds would support the long-term performance of the company and help to position it in better stead to weather the challenges in the operating environment.

    “We believe this rights issue will positively impact on the financial performance of Guinness Nigeria and help mitigate the impact of increasing finance costs in what continues to be a challenging economic environment in Nigeria. I call on all my fellow shareholders to take this opportunity and support the company’s objectives,” Savage said.

    In his remarks, managing director, Guinness Nigeria, Peter Ndegwa, said that the company has good fundamentals and potential for the future.

    “This rights issue in combination with our productivity and cost optimization drive will help provide the fuel to continue to build this business for Nigeria and Nigerians,” Ndegwa said.

    The proposed capital issue will provide another window for Diageo Plc, the parent company and majority shareholder of Guinness Nigeria Plc, to inject capital into the Nigerian subsidiary after the multinational backed down from its earlier proposal to acquire additional equity shares in Guinness Nigeria.

    Diageo had recently withdrawn from its plan to acquire additional shares of up to 15.7 per cent in Guinness Nigeria citing the challenging market conditions in Nigeria. Diageo had in September 2015 announced that it was considering acquiring 15.7 per cent equity stake in Guinness Nigeria through its wholly owned subsidiary, Guinness Overseas Limited.

     

  • Union Bank’s shareholders approve N50b rights issue

    Union Bank’s shareholders approve N50b rights issue

    Union Bank of Nigeria (UBN) Plc plans to raise N50 billion new equity funds from existing shareholders of the bank.

    At an extraordinary general meeting yesterday in Lagos, shareholders of the first generation bank approved five resolutions authorising the board of the bank to raise up to N50 billion through rights issue.

    Shareholders increased the authorised capital of the bank from N9.5 billion consisting of 19 billion ordinary shares of 50 kobo each to N17.5 billion consisting of 35 billion ordinary shares of 50 kobo each by the creation of additional 16 billion ordinary shares of 50 kobo each.

    With this, the memorandum and articles of association of the bank will be amended to reflect the increase in the authorised share capital to N17.5 billion.

    Amendment of the bank’s articles and memorandum of association in order to authorise an increase in the bank’s share capital and the mandate to issue new shares require approval of at least a three-quarter majority of votes present at the meeting. The resolutions yesterday were supported by shareholders representing altogether 99.6 per cent of the votes.

    Chief executive officer, Union Bank of Nigeria (UBN) Plc, Mr. Emeka Emuwa, noted that obtaining shareholders’ approval for the bank’s capital increase is a necessary step towards the rights issue.

    He said the increase in capital will further strengthen Union Bank’s near-term positioning and enable it to realise its long-term growth aspirations.

    “We view the right issue approval as a strong sign of shareholders’ support for Union Bank’s  growth strategy and our plans to scale up operations and strengthen our position in readiness for uptake when the macroeconomic direction changes,” Emuwa said.

    Key extracts of the interim report and account for the Union Bank Group for the nine-month period ended September 30, 2016 showed that group gross earnings rose by 12 per cent to N93.43 billion in third quarter 2015 as against N83.72 billion recorded in comparable period of 2015. Interest income had grown from N66.91 billion to N70.96 billion. Net interest income improved by 19 per cent from N40.27 billion to N48.07 billion. Non-interest income also grew by 35 per cent from N16.67 billion to N22.47 billion.

    Group profit before tax rose by 27 per cent to N13.3 billion in third quarter 2015 compared with N9.6 billion in third quarter 2015. After taxes, net profit also rose from N9.34 billion to N13.01 billion. With these, earnings per share improved from 55 kobo in 2015 to 76 kobo in 2016.

    Key underlying ratios were generally positive. Net interest margin, which underlines the profitability of the core banking operations, improved from 8.1 per cent to 8.8 per cent. Cost-to-income ratio also improved to 63 per cent as against 76 per cent in comparable period of 2015. Return on equity increased to 6.9 per cent as against 5.5 per cent while return on assets improved from 1.2 per cent to 1.6 per cent.

  • Sovereign Trust Insurance extends N1.1b rights issue

    Sovereign Trust Insurance (STI) Plc has extended the acceptance period for its ongoing rights issue by till this weekend.

    STI seeks to raise N1.15 billion in new equity funds from existing shareholders through a rights issue of 2.29 billion ordinary shares of 50 kobo each at the nominal price of 50 kobo per share. The shares were pre-allotted to prequalified shareholders on the basis of one new ordinary share for every three ordinary shares held as at the closure of register for the rights issue.

    Securities & Exchange Commission granted STI additional three weeks, moving the initial closing date from February 20, to Friday, March 13.

    The net proceeds of the rights issue would be used to finance the insurance company’s five-year blueprint. The blueprint is expected to reinforce the company’s competiveness’ in the Nigerian market, including its market share.

    Several companies are turning to existing shareholders to raise funds as the primary public offer market remains largely inactive.

    Access Bank had last week extended the acceptance period for its ongoing rights issue of N52.6 billion. SEC approved the extension of Access Bank Plc’s rights issue by two weeks to March 18. Access Bank is offering 7.63 billion ordinary shares of 50 kobo each to existing shareholders at N6.90 per share. The rights issue, which opened on January 26, was initially scheduled to close on March 4.

    The bank stated that the extension of the acceptance period was done to give shareholders ample time to subscribe for their rights. The management of the bank urged shareholders to take advantage of the extension to pick up their rights.

    It is expected that trading on both rights issues of Access Bank and STI will continue on the Nigerian Stock Exchange (NSE) all through the extended period.

    Majority and retails shareholders in several quoted companies have been using rights issue to bridge equity financing gaps and reduce dependence on bank loans by injecting their own funds into their companies.

    Against the background of the in investors’ apathy and deteriorating pricing trend at the capital market, several core investors that hold the decisive votes on the success of recapitalisation of quoted companies have opted for rights issue, which allows existing shareholders to recapitalise their companies.

    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.

    Market analysts said the growing list of rights issues early this year underscores the preparedness of core investors to refinance their companies as well as the undervaluation of several companies at the stock market.

    According to analysts, rights issue implies significant financial commitment by the core investors.