• Login
  • Register
Nairametrics
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
Nairametrics
No Result
View All Result
Home Opinions Blurb

Minority Shareholders of these foreign owned companies are about to get roasted

Onome Ohwovoriole by Onome Ohwovoriole
June 19, 2017
in Blurb
Minority Shareholders of these foreign owned companies are about to get roasted
Share on FacebookShare on TwitterShare on Linkedin

The recent spate of rights issues and forex loans being converted into equity by multinational companies could leave minority shareholders roasted. Nigerian multinationals such as Unilever, PZ, GSK, Nestle, Guinness and Nigerian Breweries, have at one time or the other received bailouts in the form of shareholder loans from their companies.

How this happened?

A drop in crude oil prices and production volumes in 2016 led to the depreciation of the Naira against other currencies. This lead to restrictions being placed in the foreign exchange market by the Central Bank of Nigeria (CBN) and difficulties in accessing foreign exchange. Parent companies of these firms had to step in by giving them loans and concessionary rates, effectively bailing them out. But as the saying goes, nothing goes for nothing. Local firms are compensating for these bailouts by offering shares in exchange and sadly, at the expense of minority shareholder.

RelatedStories

Sterling Bank concludes core application migration, leads the way for African Banking

Sterling Bank to raise $400 million via debt and equity instruments to strengthen growth capacity and balance sheet 

July 15, 2025
Doctors

South-West doctors threaten strike over unfavorable allowances, issue 21-day ultimatum to FG

July 15, 2025

Why exchange shares for loans?

With the depreciation of the Naira over the last two years, local subsidiaries of these companies have faced increasing difficulty repaying these loans. Some have taken on huge provisioning arising from exchange rate losses while others are currently negotiating with parent companies for even more bailouts. These firms are currently in a fix, as Naira provisions for these loans have doubled, so paying back will be difficult. Case in point is the current tussle between Etisalat Nigeria and a consortium of Nigerian banks. Sales have been flat or declined due to the tough macroeconomic climate, hence the right issues. Other examples of bailouts by parent companies involve the likes of Unilever, Nestle, Guinness, GSK. Unilever, recently announced its own rights issue on the back of a similar bailout deal.

Sharks?

For the parent companies, conversion gives them an opportunity to increase their stakes in these firms. Previous efforts have been met with stiff resistance by minority shareholders.

History on the Nigerian Stock Exchange (NSE) has shown that once multinational firms have a majority stake in a company, delisting from the floor usually follows as was seen with Nigerian Bottling Company (NBC). Many of these companies find listing on the NSE a big hassle due to numerous fees they must pay and fines that come with late submission of results. Delisting also gives them greater control of the firm as they face less scrutiny and reduced pressure to constantly pay out profits as dividends.

The depreciation means they will have a bigger stake, as they have more Naira on their hands. The harsh economic climate may also prevent many minority shareholders from taking up their rights. While some of the companies like Guinness Nigeria say the intended funds are being raised for capital projects and working capital, the monies have already been spent on raw materials, so no new business is being done.

Shareholders need to be more vigilant when it comes to firms taking foreign loans especially from their parent companies. These companies also need to look inwards for domestic sources for their raw materials and apply hedging and other derivatives to their foreign exchange obligations.

 

Onome Ohwovoriole

Onome Ohwovoriole

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com

Related Posts

Sterling Bank concludes core application migration, leads the way for African Banking
Company News

Sterling Bank to raise $400 million via debt and equity instruments to strengthen growth capacity and balance sheet 

July 15, 2025
Doctors
Health

South-West doctors threaten strike over unfavorable allowances, issue 21-day ultimatum to FG

July 15, 2025
Small Business
Business News

15 things you don’t need to start a business in Nigeria 

July 15, 2025
NNPC, Akwa Ibom, GACN sign $3.5 billion gas agreement
Corporate deals

NNPC, Akwa Ibom, GACN sign $3.5 billion gas agreement

July 15, 2025
Key policies that shaped Nigeria’s tech industry under Buhari’s 8-year rule 
Spotlight

Key policies that shaped Nigeria’s tech industry under Buhari’s 8-year rule 

July 15, 2025
Investments
Financial Literacy

Investing in a volatile world: Strategies for Gen Zs, millennials, and retirees

July 15, 2025
Next Post
[The Nigerian Economy Daily] FG has approved the closure of five foreign missions and embassies

All the major economic news from Nigeria in 5 minutes - 19/6/2017

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Emple
nlng
first bank








DUNS

Recent News

  • Sterling Bank to raise $400 million via debt and equity instruments to strengthen growth capacity and balance sheet 
  • South-West doctors threaten strike over unfavorable allowances, issue 21-day ultimatum to FG
  • 15 things you don’t need to start a business in Nigeria 

Follow us on social media:

Recent News

Sterling Bank concludes core application migration, leads the way for African Banking

Sterling Bank to raise $400 million via debt and equity instruments to strengthen growth capacity and balance sheet 

July 15, 2025
Doctors

South-West doctors threaten strike over unfavorable allowances, issue 21-day ultimatum to FG

July 15, 2025
  • iOS App
  • Android App
  • Contact Us
  • Home
  • Markets
  • Sectors
  • Economy
  • Business News
  • Financial Literacy
  • Disclaimer
  • Ads Disclaimer
  • Copyright Infringement

© 2025 Nairametrics

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Social Media Auto Publish Powered By : XYZScripts.com
No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Login
  • Sign Up

© 2025 Nairametrics