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Oando’s Rights Issue may be fully subscribed, Stockbrokers

Category: Capital Market


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Oando’s Rights Issue may be fully subscribed, Stockbrokers

 

Following the high demand for the application forms of Oando Plc Rights Issue, stockbrokers have stated that the offer may be fully subscribed .

 

Stockbrokers that spoke with Vanguard weekend at the Lagos floor of the Nigerian Stock Exchange (NSE) complained of illiquidity, adding “it has not affected shareholders who kept demanding for their Rights Issue applications.”

 

 

According to them, “ Some of the shareholders that could not afford to pay cash to exercise their rights demanded that we help trade it for them. So in that regard, we are of the view that the offer would be fully subscribed.” Meanwhile, 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 Plc 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 place 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. 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.

 

(Source:Vanguard)



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