Tuesday, October 11, 2011 10:31 AM
Based on the unanimous endorsement of its recapitalisation agenda by shareholders, Union Bank of Nigeria Plc, at the weekend explained that it had concluded all necessary arrangements to begin its rights issue.
According to the bank, the rights issue which was awaiting the approval of the Securities and Exchange Commission (SEC) was expected to pave the way for existing shareholders to own up to 21 per cent of the bank’s equity by taking up 1,407,291,667 ordinary shares. Under the arrangement, each shareholder would be entitled to receive five new ordinary shares for every nine reconstructed shares held.
The management of the bank explained that the transaction would be at a price of NGN6.81 per share, which was equivalent to the price per share paid by Union Global Partners Limited, the approved core investor. “This has highly been discounted in the light of the share reconstruction and considering its current technical suspension at NGN2.09 with a market capitalisation of NGN28.235bn based on the 13.510bn ordinary shares,” said Executive Director in charge of International & Investment Banking & treasury, Philip Ikeazor.
Explaining further during an interactive session with journalists, Ikeazor said, Union Global Partners Limited, would inject USD500mn equity and USD250mn Tier II capital bringing its investment to USD750mn representing 60 per cent of the bank’s equity.
Also, the Asset Management Corporation of Nigeria (AMCON) would be a shareholder in exchange for the provision of financial accommodation with 19 per cent equity. Meanwhile, he pointed out that there was a standby investment arrangement to be provided by AMCON to cover any shortfall in the equity investment amount by Union Global Partners Ltd (UGPL) within 90 days.
Executive Director Commercial Banking (South), Mr. Adekunle Adeosun, who represented the chief executive officer of Union Bank of Nigeria Plc, said that the rights issue was expected to cushion the effect of the loss of shareholders in terms of the devaluation of the bank’s share price in the capital market due to the banking crisis.