By Nse Anthony-Uko,
(Sundiata Finance) — Unilever Nigeria Plc said it is set to raise about N58.86 billion by selling new ordinary shares to existing shareholders.
In a regulatory filing at the Nigerian Stock Exchange (NSE), Unilever Nigeria indicated that it plans to float a rights issue of 1.962 billion ordinary shares of 50 kobo each at a price of N30 per share. The rights issue will be pre-allotted to shareholders in the register of the company as at the close of business yesterday on the basis of 14 new ordinary shares for every 27 ordinary shares held.
Shareholders of Unilever Nigeria had at the annual general meeting in Lagos approved a proposal by the board of the company to raise up to N63 billion in new equity funds by selling new shares to existing shareholders.
In preparation for the rights issue, shareholders also increased the authorised share capital of the company to N5 billion or 10 billion shares through the creation of additional 3.95 billion ordinary shares of 50 kobo each.
Unilever Plc, United Kingdom, the majority core investor in Unilever Nigeria, is expected to provide about N35.4 billion in the capital raising. Unilever UK holds 60.06 per cent majority equity stake in Unilever Nigeria through its Unilever Overseas Holdings BV. Stanbic Nominees Nigeria Limited holds the second largest equity stake of 10.43 per cent in Unilever Nigeria.
Unilever UK has shown sustained interest in increasing its majority shareholding in the Nigerian subsidiary. It mopped up additional shares through open market purchases at the Nigerian Stock Exchange (NSE) to increase its majority stake by 1.53 per cent from 58.53 per cent in 2015 to 60.06 per cent in 2016. It had also made open market purchases in 2015.
Unilever UK will be required to contribute at least N35.35 billion to the rights issue to retain its current shareholding and the multinational may increase its stake by applying for additional shares from renounced rights.
Capital market analysts said Unilever share price closed on June 28, 2017 at N40 per share thus the rights issue will be selling at a discount of about 25 per cent to the current share price.
They noted that the company offering 14 new shares for every 27 currently being held means Unilever will be creating a whopping 52 per cent new shares just to accommodate the N58.8 billion it plans to raise.