The bearish trend in Nigeria’s stock market has taken its toll on quoted companies as some have slashed their right issue prices.
UNITED Bank for Africa Plc (UBA) last Friday announced the reduction of its rights issue price from N4.00 to N3.50 on the basis of One (1) ordinary share for every Ten (10) shares held.
In the same vein, UBA said it has received approval from the Securities and Exchange Commission (SEC) for the offer period to be extended by one week from Thursday, 5 February 2015 to Thursday 12 February 2015.
UBA is the second issuer that has reduced its rights issue price in recent times coming after oil marketer, Oando Plc reduced its offer price from N22.00 to N16.50.
However, UBA Plc said the reduction in price was to reflect the current bearish condition of the Nigerian stock market, and that the extension of the offer is part of incentives package to woo shareholders to its ongoing rights issue.
The bank had launched a rights issue of 3.3 billion ordinary shares of 50 kobo each at N4 per share and the offer had opened on December 29, 2014 and was billed to close on February 5, 2015.
UBA cut down the offer price by 12.5 per cent to N3.50, while extending the offer period by one week to February 12, 2015.
The bank said market has suffered significant decline in the last three months. And in order to reflect the reality of the current market conditions, UBA has to change in the offer terms of the Rights Issue.
However, the bank retained the pre-allotment ratio of one for 10 shares and shares on offer of 3.298 billion ordinary shares of 50 kobo each, which implies that the gross proceeds target will reduce from N13.2 billion to N11.5 billion.
The bank explained that an application was made to the Securities & Exchange Commission to change the offer size, price and ratio of the issue, which was approved.
In addition, a regulatory filing on the rights issue indicated that the bank would use the net proceeds of the N13b rights issue to foster operations in its business units across Africa.
UBA had launched a new business development plan aimed at consolidating the bank’s position as a leading pan-African global financial services group. The three-year business development plan codenamed Project Alpha was designed as the group’s next focus of strategic transformation and it contained key transformation initiatives.
According to the bank, the business plan was designed to consolidate the group’s strategic positioning and fully capture the opportunities from Africa’s economic renaissance.
It said Project Alpha is focused on leveraging all aspects of the group’s footprint, product offerings and operational capability, allowing a commitment to customer service transformation, market share growth, the implementation of key e-banking initiatives across all segments, the growth of corporate and trade finance capabilities.
It outlined that a critical aspect of the Project Alpha initiative is the focus on UBA Africa, which is projected to contribute about 50 per cent to the group by 2016.
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