The Group Chief Executive Officer of Oando Plc, Mr. Wale Tinubu has said that existing shareholders of the company who may not be able to participate in ongoing rights issue of the company due to liquidity problem, have the opportunity to trade their rights on the floor of the Nigerian Stock Exchange (NSE).
Oando is currently offering 301,694,876 ordinary shares of 50 kobo each at N70 per share to existing shareholders at a ratio of one new share for every shares already held to raise over N20 billion.The offer opened on January 25 and is expected to close on February 19, 2010.
The offer price of N70 is already offering an instant 24 per cent capital gain for investors who take up their rights. The share price was placed on technical suspension at N94, so the right issue of N70 is an instant N24 gain to those taking their rights.
However, due to liquidity problem, some shareholders may not be able to take up their rights. But speaking at an investors' forum last week, Tinubu said that existing shareholders, who may not be able to exercise their rights will not lose out completely as they can trade their rights on the floor of the NSE.
"Given the future prospects in the company and the incentives the rights issue price offer, we are confident that all our shareholders will use this opportunity to increase their share holding in the company."But should there be any shareholder who may be prevented by one reason or the other from being able to take up their rights, they can trade the rights on the floor. By doing so they will not be losing out completely," he said.
The chief executive officers of some banks and shareholders had last week pledged their support for the offer.For instance, the Group Managing Director of First Bank of Nigeria Plc, Mr. Bisi Onasanya said the offer was desirable assuring that banks are always there to support Oando's operations.
"On behalf of First Bank, I endorse the offer, which I think is desirable. The banks are always there and ready to supply you with funds. I want to assure you that banks are still lending and we are never afraid to take risks. We want you to increase your participation in the upstream sector because of the fuel scarcity in the country," he said.Speaking on behalf shareholders, the National Co-ordinator of Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu said the price of N70 per share is a good buy.
Nwosu said, 'we have told our members and friends that the offer is a good buy at N70 and we believe the returns we will get in future will be okay. We will participate in the offer, but the company should not reduce its forecast as stated in the prospectus. We know you can exceed it."Tinubu explained that net proceeds of issue amounting to N20.4 billion will be used to partly refinance its aggressive diversification and acquisition strategy the firm had embarked upon in last three years.
According to him, the aggressive growth saw the company become highly leveraged, and would therefore need to pay down and restructure some its loans under better terms.He added that the company also needed to raise further capital from debt and equity financing sources to develop its new acquisitions that can diversify its revenue stream.