Wary of the prevailing bearish trend on the Nigerian Stock Exchange (NSE), the Group Chief Executive of Crusader Nigeria Plc, Mr. Olutola Mobolurin has disclosed investment in convertible debenture as a safer option for equity-weary and risk-averse investors.
According to him, the prevailing market condition has made investors lose interest in investing in the capital market due to the persistent fall in the prices of listed equities.
At an interactive session with financial journalists in Lagos, recently, Mobolurin said that the company, which is currently raising N7 billion from the Nigerian Stock Exchange (NSE) through rights issue and convertible debenture, in a quick reaction to the decline investors\' appetite for equity shares in the market, has postponed its planned offer for subscription of 1.2 billion ordinary shares of 50 kobo each.
He added that the company's N4 billion, 12 per cent unsecured convertible debenture stock, which is being offered at par to the general investing public, is to allay their fears of price loss by giving them a high grade investment instrument with a guaranteed high cash income and capital with the option to switch to shares any time the investor desires at a price of N7.35 per share over the next five years.
In his words: Due to the prevailing market condition and persistent fall in the price of shares, the Crusader convertible debenture guarantees investors, 12 per cent interest per annum till 2013. It also guarantees investors conversion of the convertible debenture into Crusader\'s ordinary shares at the current market price of N7.35 per share, at any time the investor chooses between now and June 30, 2013.
It does not matter what the price of Crusader share is in the market, whether it is N10 or N40, every convertible debenture holder will be able to buy the shares at a guaranteed price of N7.35 per share till June 30, 2013. In the event of the company giving a bonus, the convertible debenture holder will also participate, he added.
He further explained that the convertible debenture, which he described as a brilliant alternative to equity weary and risk-averse investors, allows investors to enjoy high cash income returns while waiting for the equity market to recover and at the same time locking in a purchase price that is guaranteed for five years.
The company is presently offering 797,884,198 ordinary shares of 50 kobo each at N4.50 per share on the basis of one ordinary share for every shares held as at February 25, 2008 alongside a N4 billion, 12 per cent unsecured convertible debenture stock.
By these offers, the company hopes to raise N7.086 billion from investors to finance the creation of a strong and broad based financial services group through the acquisition of new business and expansion of its existing businesses and products.