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NBC Plc Delisting must be Rejected - CIS



Being the text of a press briefing delivered by the President of the Chartered Institute of Stockbrokers (CIS) on Friday, February 25, 2011 in Lagos, Nigeria
The main reason why the company wants to delist is that it wants the company to “become a wholly owned subsidiary of its majority shareholder, Coca-Cola Hellenic Bottling Company S.A.” Any other excuse given by the company is beside the point. Nigerian Bottling Company Plc (NBC) will equally be re-registered as a private company in accordance with the relevant provisions of the Companies and Allied Matters Act. The supposed investment of $14 billion is only a ruse to drive Nigerians out of NBC. 
As a private company, the activities of the company are no longer subjected to public scrutiny. The Nigerian workers would also be worse for it in terms of the treatment they would get from the foreign dominated board of directors. 
Having been nurtured to a very comfortable and rich position, the majority Greek owners of NBC are not only delisting, they are also dumping the Nigerian shareholders who have helped to sustain them over the years.  They do not want any dilution. 
To become a wholly owned subsidiary of its majority shareholder, Coca-Cola Hellenic Bottling Company S.A., NBC would pay N43 per share as consideration to the minority shareholders. Currently, the price of NBC is N40.89 (22/2/2011). What is gain for the Nigerian shareholders? 
As a strategic move, a company may delist in order to benefit its shareholders if its shares are trading below intrinsic value. The main purpose would be to reward the shareholders with substantial returns over the short term. In the case of NBC, the Nigerian shareholders are cleverly excluded leaving the Greek owners to effectively regain the full control and ownership of the company. 
Coca-Cola Hellenic Bottling Company S.A. currently operates in 28 countries as of today. Is Coca-Cola Hellenic Bottling Company S.A. delisting from other stock exchanges in the remaining 27 countries? If not, why is it limiting its delisting move to Nigeria . 
That the Greek owners are bringing in more funds should not exclude Nigerians or send Nigerians out of the company in order to bring in more funds. Funds can be brought in form of convertible preference shares, convertible bonds or rights issue. They should let Nigerians decide that they do not want to invest by not taking up their rights. 
Employment of funds will yield more income to Coca-Cola Hellenic Bottling Company S.A. because Nigerians will consume the products. Is it right for the Nigerian consumers to be denied the opportunity to invest in the company? 
The Securities & Exchange Commission recently introduced a new code of corporate governance for directors of listed companies. Are the foreign shareholders afraid of the new code introduced by SEC?   
Maybe it was meant to be a joke. If it was then it is a cruel joke. May be it is to test the waters to see the reaction of the nation in times like these. If there is no protest then they would go ahead and others will follow. 
Also being an election year politicians will be so engrossed in seeking re-election that delisting NBC Plc will go unnoticed. NBC seems to have picked a perfect time to foist a coup on the Nigerian capital market. Now it is true, no joke, no testing the waters. Then it is a Greek gift by the Greeks who own the majority shares in the Nigerian Bottling Company Plc. Otherwise how do we explain it? How is it that, it is at this critical time that the Federal Government has been working hard to encourage the listing of large cap companies on the Nigerian Stock Exchange, that the NBC is seeking to delist? How come? 
The Greek Gift of $14 billion! 
It is interesting that NBC is seeking to delist because the Greek majority shareholders want to invest the sum of 14 billion US dollars. Investing that “huge” money according to them will mean that the minority Nigerian shareholders (who have not been given any option of contributing any of this money) will not be able to wait for several years to earn a dividend. TRUE
NBC grew to where it is today at the expense of the Nigerian populace who over the years have been consuming millions of bottles of the coca cola products NBC is franchising for Coca Cola International.
In the latest results for the year ended 31 December, 2010, released by Coca-Cola Hellenic Bottling Company S.A., Nigeria ranks third in term of volume of million unit cases of products sold by the group among a list of 27 countries. She has consistently maintained this position over the last two years. While volume has been increasing in Nigeria , the reverse is the case for Greece . 
The volume of million unit cases of consumption by Nigeria has over the past many decades earned the Greek owners, billions of dollars in income in form of dividends, huge salaries and allowances to the so called foreign Greek experts that have held sway at NBC, payment for imported goods from Greece and elsewhere in Europe, technical and marketing agreement fees. 
How about the billions of money in form of credits from Nigerian Banks that yielded millions of dollars of dividends. These dividends did not accrue for funds brought in by the owners. They were sourced as working capital and overdrafts. How about the money that also accrued to them for amounts attributed to foreign exchange differentials and over-invoicing that were siphoned out of this country to the Greek owners? 
It is ironic that the Greek owners  argue that the money they are bringing will enable them continue to employ more Nigerians, while refusing to tell Nigerians all the hundreds of Nigerian managerial and executive staff that they compelled, cajoled or blackmailed to resign all in the name of globalization. While sacking the Nigerians, they brought in Greek employees to replace them. How did Nigerians become minority shareholders in NBC? 
It is begging the question to suggest that Nigerian shareholders will not be able to wait for many years to receive dividends. Are the Greek owners more patient than the Nigerians. If they can wait what gives them the impression that Nigerians can’t wait like them? By the way when did NBC pay dividends in the last five years? Did the Nigerian shareholders take them to court to force them to pay? How do they plan to reward themselves after putting so much investment? 
Are they suggesting they are investing 14 billion dollars for nothing? Oh could they be helping themselves in other ways such as exorbitant salaries for so called experts from Greece or South Africa ? Or may be by over-invoicing of goods supplied from Greece and or South Africa ? Could it be that this time with no Nigerian on board, technical agreement fees will be jerked up? 
Or since it is likely that the 14 billion dollars will be borrowed from Banks in Greece or South Africa , the interest element will wipe out whatever profits to be earned. By the way was Greece not recently brought back to life by the EU and Germany ? So where is the 14 Billion dollars to come from? International commercial banks? So can’t Nigerian banks syndicate such a loan? If it is equity why are Nigerian shareholders not given the right of first refusal? 
What is the money going to be invested in? Is NBC replacing all existing plants at once? Will it be that all the plants as at today are not working? So what are the investments that require the $14 billion? Can’t the investment be phased, one or two plants at a time? We just wander why the investment of such magnitude will not earn returns for many, many years. What is the guarantee that after going private, the expected $14 billion investment would come in after delisting and driving Nigerians away from NBC? 
While for us the most important issue is not how much the buy-out price is, it is pertinent to ask why  the  Greek owners did not propose this when NBC was at its highest price? In fact could it be true that the Greek managers of the company carefully orchestrated the losses incurred these past years so as to achieve this grand design of buying out the Nigerians at so ridiculous a price. Could that be why they hounded out the Nigerian managers and directors so they could hatch their cynical plans and foist a Greek horse on Nigerians? 
Now Nigerians should know her true friends. Are the Greek majority owners truly friends of Nigeria ? If they are, why do they want to deny Nigerians an opportunity to invest in what will be of benefit to Nigerians. It all shows that the Greeks do not have the interest of Nigeria at heart. Do they think that Nigerian investors invest only for the dividends? Or they do not think Nigerians should benefit from price appreciation or the joy of being a part of an international organization? 
Many years ago when the owners of Nigerian Breweries Plc needed funds to expand their business in Nigeria they floated a Euro bond that allowed all shareholders to participate by right. 
Some Nigerians took their rights while others refused. This enabled the Heineken group to acquire majority shares. After that investment, dividend was not much. With time this has been improving and now even the price is appreciating. Would it have been fair and just to the Nigerian shareholders of Nigerian Breweries Plc to be denied the opportunity of investing in the Eurobond by delisting? The same thing happened in Guinness and today it is a win-win situation for both the Nigerian and foreign shareholders. Nigerians must resist this move. The Leventis family that controls the ownership of NBC must realize that it is the sweat of Nigerians that made NBC and its products household names in Nigeria today. They must be told that it is Nigeria that made them their riches. 
This is the time true friends of Nigeria must stand to be counted. All multinational companies must join the likes of Nigerian Breweries, 7-up, Guinness, Nestle, Unilever, PZ etc to get listed on the Nigerian Stock Exchanges. It is by getting listed that they can contribute not only to the development of the capital market but its internationalization. The big telecom companies, the upstream oil companies, and host of other large capital companies must join hands with the Federal Government to develop the capital market whose contribution to the GDP should be over 100% as it is in their home countries. 
One of the indices by which Nigeria will be adjudged to be one of the 20 developed counties of the world by 2020 is the market capitalization is contribution to GDP. Allowing NBC to delist will encourage others to do likewise. The implications are: a market whose development is truncated, and the inability of Nigeria to become one of the top twenty developed countries by 2020. 
If NBC goes ahead to delist there are many options open to Nigeria . We hope the foreign shareholders will not push Nigerians to consider these options.
Sanya Oyeyemi
Chartered Institute of Stockbrokers
10th Floor, CSS Bookshop House
50/52 Broad Street, Lagos , Nigeria
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