This Explanatory Statement has been prepared to provide all the material and required information to all the Shareholders of Great Nigeria Insurance Plc. (“GNI Plc” or “the Company”), in respect of the Resolution to consider and approve the voluntary delisting of Great Nigeria Insurance Plc. From the Main Board of The Nigerian Stock Exchange (“NSE”) to be considered at the Extra-Ordinary General Meeting (“EGM”) holding at 10:00am on Wednesday, 25 July 2018 at His Grace Events Centre, Dreamland Africana way, off Orchid Hotel, After 2nd Toll Gate, Lekki- Expressway, Lagos.
Over the last 5 years, there is little or no trading activity on the shares held by the minority shareholders. There has also been a considerable fall in trading volumes over the last twelve (12) months with an average daily volume of circa 1,200 units during the period March 2017 to March 2018.
Shareholders are not benefiting from the continued listing as shareholders are not getting any exit opportunity and their investments have been locked up and they find it difficult to dispose of their shareholding. Neither the company has benefitted as the company’s shares continue to trade at a significant discount to the intrinsic value.
Also, GNI’s Free Float currently stands at 16.03%, significantly below the NSE’s minimum Free Float of 20.00%. With this Free Float deficiency, the NSE could take enforcement action even though The Quotations Committee of the National Council of The Exchange (“QCN”) has extended the curing period to May 2020. We do not expect that this deficiency will be cured during that period and we expect the NSE to initiate a Regulatory Delisting.
Through the Voluntary Delisting of GNI, the Directors of the Company will be exercising a regulatory provision that will shield the Company from any enforcement action that the Exchange may effect which may arise as a result of the outstanding Free Float deficiency. Furthermore, through the Voluntary Delisting process, the Company will be providing an Exit Consideration to minority shareholders who do not wish to remain in an unlisted company.
2. The Proposal
The Board of GNI Plc. proposes to delist all the ordinary issued shares of GNI Plc. of 3,827,485,380 units from the Daily Official List and from trading on the Main Board of the Nigerian Stock Exchange (“Voluntary Delisting” or “The Transaction”).
Part of the listing rules of the NSE is that listed Companies must have at least 20% of its listed shares held by the investing public. GNI Plc. is in violation of this Listing Rule and thus liable to be mandatorily delisted by The Nigerian Stock Exchange. Through the Voluntary Delisting of GNI Plc, the Directors of the Company will be shielding the Company from any enforcement action or sanction that the Nigerian Stock Exchange may impose, for example by way of a mandatory Regulatory Delisting and potential reputational damage to the Company.
Also, the delisting will afford the company to carry an imminent Corporate Restructuring exercise to take advantage of emerging opportunities and may consider re-listing the company in the future if the market conditions are favourable.
The Voluntary Delisting will not occasion loss of business opportunities as there are similar unlisted Insurance Companies who are commanding significant share of the Insurance Market. Also, minority shareholders will not lose their shares because of the Voluntary Delisting and such shareholders may retain their membership in the unlisted Company. However, through the Voluntary Delisting process, the minority shareholders - who do not wish to be members of an unlisted company – will have an opportunity to exit the Company.
a. Exit Options and Consideration
As part of the requirements of the NSE for Voluntary Delisting, the Majority Shareholder in GNI Plc, Insurance Resourcery and Consultancy Services Limited (“IRCSL”) is required to provide an exit opportunity to the shareholders of exiting GNI Plc. Shareholders.
Also, the NSE has provided basis for which consideration is given to exiting shareholders preparatory to a delisting process. IRCSL is willing to pay a cash consideration of N0.50 per share (“Exit Consideration”) based on the highest price of N0.50 at which GNI Plc. has traded in the last 6 months preceding the date of the AGM/EGM where the resolution to de-list was passed.
Shareholders that intend to a member of an unlisted GNI Plc shall be free to remain and there is no obligation to receive the Exit Consideration.
b. Conditions Precedent
A. The Voluntary Delisting will be effective upon the following occurrence of events:
· B. Directors meet and pass resolution to de-list the Company
· C. Resolution for de-listing proposed for approval of Shareholders at Annual General Meeting (“AGM”)/Extraordinary General Meeting (“EGM”)
. Draft notice containing proposed resolution to be submitted to The Nigerian Stock Exchange for vetting and approval
. Publish in at least 2 National Dailies at least 21 days before the AGM/EGM
. The Nigerian Stock Exchange to be represented at the AGM/EGM to observe proceedings
· D. IRCSL being the majority shareholder in GNI Plc provision of sufficient funds to exiting shareholders. The Funds must be kept with a Custodian acceptable to The NSE -Written approval of the NSE is obtained to the Voluntary Delisting.
3. Effect Of The Delisting
With the Delisting of GNI Plc, the shares of the Company will no longer be available for trading on the Main Board of The Nigerian Stock Exchange. The Company will continue to operate as an unlisted company. The Board of Directors GNI Plc do not envisage a loss of business opportunities for the unlisted GNI Plc and will continue to seek ways of creating value for the Company’s shareholders. The Company may consider creating a trading window for shareholders at the Over the Counter (“OTC”) markets.
4. Plan For Employees
The Voluntary Delisting of GNI Plc. will not have any impact on the existing employment contracts of its staff.
5. Directors Composition
The Voluntary Delisting of the Company will not have any impact on the Board of Directors of GNI Plc.
The taxation consequences of the exercise of an exit option will depend on the jurisdiction in which each shareholder is resident for tax purposes. Under current Nigerian tax legislation, any gains realized by a shareholder from receiving the Exit Consideration should not give rise to any chargeable capital gains tax or stamp duty. However, this statement is not intended to be, and should not be construed to be, legal or tax advice to any particular shareholder.
Shareholders who are in doubt about their taxation position, or who are subject to taxation in a jurisdiction outside Nigeria, are strongly advised to consult their own professional advisers without delay as to the consequences of exercising any of the exit options.
7. Meeting To Approve The Voluntary Delisting
At the Extraordinary General Meeting (“EGM”) scheduled to hold on July 25, 2018, the shareholders of GNI Plc will consider and, if thought fit, approve the Voluntary Delisting. At the EGM, each shareholder - entitled to vote
- will be entitled to one vote for every ordinary share held.
8. Attendance At The Meeting
Attendance at the meeting, for purposes of voting on the resolution that will be proposed to shareholders. In the alternative, the submission of a Proxy Form for purposes of voting at the meeting should attendance not be possible. The attached form should be duly completed and returned to the Company Registrars, GTL Registrars Limited.
9. Cash Consideration Settlement
It is expected that exiting shareholders will be settled by way of electronic transfer to the respective bank accounts as provided in the attached form.
10.GNI Plc Going Forward
The Nigerian Insurance Industry is at its nascent state. To take advantage of the opportunities that would present itself, especially as insurance products become more common place in our society, and significant foreign investments flow into this industry, it is imperative that this business takes proactive steps, and positions itself rightly.
The operational focus of the leadership of Great Nigeria Insurance Plc in the last few years, has been to create a strong foundation upon which the full potential of the firm can be realised, creating significant value to its highly esteemed shareholders, and building a business that is poised to be one of Nigeria’s top 10 insurance firms.
To achieve this lofty goal, the firm is committed to putting the right processes in place, deepening the technology of its operations, continuous training and retraining of staff, further strengthening corporate governance, and building a base that would ensure that the legacy of this business would continually be upheld.
The management and board recognize the need to be more operationally efficient, and as such, are committed to pursuing cost cutting measures where necessary, while extracting more value from existing assets. The overall goal is to create more value for shareholders, and finally begin to reward its valued shareholders for sticking with it through thick and thin. The board and management team deeply appreciate the support of every single shareholder so far and is proud to be associated with them. They further implore the shareholders to continually give them their support as they continue along the journey of value creation.