By Nse Anthony-Uko
ABUJA, (Sundiata Finance) — UAC of Nigeria (UACN) Plc has unfolded plans to raise additional capital of N15.4 billion through its existing shareholders on the Nigerian Stock Exchange (NSE).
The company had initially planned to raise N20 billion in 2015 consisting of N15 billion through a private placement and N5 billion through a rights issue. The shareholders approved only the N5 billion rights issue.
After reviewing developments within the company and the capital markets, the company decided to discontinue the capital raising programme as it was not cost-efficient. With the capital market environment now conducive for capital raising the company will be raising N15.4 billion through a rights issue.
In a release to the investing public, the company said, “The need for an enhanced capital position in our animal nutrition operations was identified as a key thrust for the new capital.” The company said “Rights issues are being pursued at Grand Cereals Limited and Livestock feeds worth N7 billion and N750 million respectively, saying in addition, both firms need working capital.
“UAC’s real estate subsidiary UPDC, plan to realise certain assets has been hampered by market weakness and challenges in the operating environment and is also pursuing a rights issue of N5.2 billion. UACN believed that a rights issue of N15.4 billion will be enough to support its subsidiaries, and capital for investment opportunities that may arise.
Addressing shareholders at the 2015 Annual General Meeting in Lagos, the then Chairman, Senator Udoma Udo Udoma, had said the funds to be raised would be used to pursue the company’s plan to improve returns and address the high leverage position in two of its subsidiaries – UPDC and Portland Paints and Products Plc.
He’d noted that it would address the funding needs for expansion in its Feeds and Logistics business as well as its other expansion plans.
First quarter 2017 results for the conglomerate saw an increase in revenue from N17.6 billion in 2016 to N24.9 billion in 2017. However, profit before tax decreased from N1.7 billion in 2016 to N829 million in 2017, due to a massive increase in finance cost. Year to date, the company’s shares are down by 13.62 per cent, under performing the NSE All Share Index which is up 4.54 per cent.