Corporate News Roundup for the week ended February 17, 2018

Nairametrics

6 years ago

This Corporate News Compilation for the week ended February 17th, 2018 is brought to you by Bluechip Technology Ltd Nigeria.

On December 14th, 2010, Nigerian Bottling Company, distributors of Coca Cola announced plans to delist from the Nigerian Stock Exchange. By the second half of 2011, the company delisted from the Nigerian Stock Exchange. In what appears to be a sense of Deja vu, its fiercest competitor, Seven Up Nigeria Plc has ratcheted up plans to delist from the Nigerian Stock Exchange. The 57-year-old Nigerian Company is on its way to becoming a wholly owned subsidiary of Affelka SA, its majority shareholder. The company formally applied to the NSE seeking to delist its shares from the Exchange and end its 32 years as a publicly quoted company. Affelka owns about 73% of shareholding and wants to buy out the remaining shareholders at a price of N125 per share. As expected minority shareholders led by career activist Sunny Nwosu kicked against the planned delisting. According to him “I don’t think it is an appropriate thing to do, we have contributed all these years to build this company and now they want to take us out, from sharing in the wealth we created. It is a very serious issue,” Going public has 3 main purposes for companies looking to list. 1. Raise capital 2. Give early investors/staff an exit window to liquidate or monetize their shareholdings 3. It gives companies a global appeal as one that is transparent and adheres to be best global standards After going public the incentive to remain public is to 1. Provide liquidity for equity shareholders 2. Increase the market value of the company as a way of maximizing shareholder returns 3. Raise more capital. Once these incentives don’t exit they simply delist.
Another company, Paints and Coatings Limited is also set to delist from the Nigerian Stock Exchange. The company is going private following court ordered meeting granted by the Federal High Court directing the company’s shareholders to meet on February 15, 2018 to deliberate and vote on the scheme of arrangement for the change in the status of the company and the delisting from the NSE. A new company-Paintcom Investment Nigeria Limited is proposed to emerge after the delisting. Important to note that AMCON sold its 7.4% stake in the company to one Bizfeat Ventures Limited for a price of N1.05 kobo per share.
One of the two listed cocoa producing firms on the Nigerian Stock Exchange, Multirex, got a major reprieve last week, after NEXIM Bank promised to bail them out with N5 billion in working capital. AMCON also agreed to restructure their loans for another 5-year term. This follows an agreement reached with AMCON last September. Multirex has been shut down for over 2 years after AMCON took over the company’s bad loans. AMCON bought about N8.5 billion worth of loans from the company in 2011 from Skye Bank and shut down the company after disagreements on repayment terms and value of the loan. The company was profitable at the time. Multirex story is actually a pathetic one and maybe someday, we may do a corporate story on them.
This story is a classic case of reverse privatisation. Last week, AMCON announced that it had taken possession of Daily Times Nigeria Plc, a company which the BPE (another arm of the government) sold to Folio Ltd for N1.25 billion in 2004. As it is typical with government sales, the asset was purchased with a bank loan that has since gone bad and is now being taken over again by AMCON (another government entity). AMCON purchased the loans issued from Afribank (now Mainstreet/Skye Bank) in 2010 and has been in a running battle with the Anosike brothers (owners of Folio Communications) and one Senator Obiorah over the ownership of one of Nigeria’s oldest media companies. AMCON claims it is not interested in the ownership of the company and only wants to recover its loans. We all know how this will pan out eventually.
5.Remember Gossy water? Well, the company that produces it is dead. Shareholders of Warm Spring Waters Nigeria Limited, agreed last week to liquidate the water arm of the company citing poor corporate performance. UAC Nigeria own 76 per cent of the company. Recall, Gossy water was a product idea between the UAC, the Ekiti State Government, Ikogosi-Ekiti community and some private investors in 2002. The idea was to produce water from the famous Ikogosi springs, however things have not gone as planned. According to its shareholders “Since it commenced commercial production in 2003, the company has been delivering weak operational performance due to problems associated with the rural location of the plant at the source of the spring and associated logistics challenges, 100 per cent reliance on company-generated power and difficult operating environment. ” The shareholders of the company at a meeting held on February 6, 2018 resolved to appoint a liquidator to wind up the affairs of the company and distribute its assets.” Much as this is a sad news, I will like to applaud UAC and the other shareholders for this bold move. It’s time Big Nigerian companies accept their faith and wind down appropriately rather than seek unnecessary bank loans or bailouts which end up with AMCON.6. Reports emerged over the weekend that Dangote Cement may eventually list on the London Stock Exchange. The story which first appeared on Bloomberg suggest the company will be seeking to raise about $1 billion in an IPO. Representatives at Dangote have denied the claims, but Bloomberg believes talks are already on going as the company seeks to raise either equity or debt via a Eurobond Offer. Important to note that Dangote Cement shares are still tightly held by Dangote Industries Limited (Owned by Aliko Dangote) and has a free float of just around 14.9%. Dangote Cement also currently has a debt profile of about N398 billion ($1.1 billion). Over half of the loans are owed to its parent company, while the balance is N200 billion is owned to banks. Dangote’s loans are mostly priced in single digits, so it will be strange if it is going for a Eurobond considering the exchange rate risk. An IPO might be more plausible considering that it needs to repay its shareholder loans at some point in the future.‏
Another week another company looking to go the e-commerce way. This time its Brandocks. The company announced the introduction of an e-commerce platform for consumers who want to purchase branded shirts and other apparels online. The product is targeted at party organisers, corporates and anyone looking desire to make customised shirts for ‘asoebi’ or other needs. I am not sure if this is the first of its kind in Nigeria, but this is a very common product abroad. 8. We talked a lot of Sports betting in last week’s thread. Another betting company, Betway has indicted interest in having a go at the Nigerian market. The company believes that our huge population and internet users base of over a 100 million presents a unique opportunity for them to scale. They are currently in Kenya, South Africa and Ghana where they are successful and looking to make inroads into Africa’s largest market.
We talked a lot of Sports betting in last week’s thread. Another betting company, Betway has indicted interest in having a go at the Nigerian market. The company believes that our huge population and internet users base of over a 100 million presents a unique opportunity for them to scale. They are currently in Kenya, South Africa and Ghana where they are successful and looking to make inroads into Africa’s largest market. They claim that they will be relying on mobile apps for affordable sport betting. Sports betting, lottery and gaming is already looking like the next driver of economic growth in Nigeria.
Vogue Pay, one of Nigeria’s leading mobile money platforms announced last week that it was partnering with Interpol for the design and delivery of its citizen focused action and information portal for crime control in Nigeria. The portal which they named interport “is a platform to access information, manage stakeholder engagements and manage crime reporting.” The report also claims that the “multi-channel” digital platform “enables” Interpol to “improve citizen engagement” and “improve collaboration” with its partner networks for control of crimes in Nigeria. I’m not that smart but this smells like a portal for exchange of biometric information of people to transfer money. According to the CEO, Michael Simeon, he said “blockchain technology is the next evolution in identity management and that by leveraging it, Interpol is now better positioned to offer cross-agency data and biometric management.” Go figure
Deal Alert: This might interest you if you are into real estate. NNPC revealed during the week that its subsidiary NNPC Properties Ltd was commencing the recovery of its landed property worth N100b across the nation. I also quirked when I saw that figure. NNPC claimed that the focus of the NNPC Properties Ltd had shifted from the initial lease administration of collecting rents from tenants of the NNPC Properties to “exploring all commercial opportunities available in the real estate market to efficiently position itself as one of the key players of repute that fits the NNPC brand.” NNPC claimed that they have already started recovering some of their properties citing a 92-hectre parcel of land on Chevron Drive, Lekki, Lagos; Royal Grove Estate, Port-Harcourt, and others in Abuja and Kaduna. Interestingly they said they said all the recovered property “would be developed for the benefit of NNPC staff.” I thought the government owned these properties via NNPC?
Eat N Go Limited the operators of Domino Plaza and Cold Stone announced the introduction of Pinkberry a famous frozen yogurt brand into the Nigeria market. Pinkberry originated in Los Angeles California in 2005. The company also revealed that the Yogurt will be served in all of its locations in Lagos. When will Dominos start selling beverages that originated from Nigeria? If you had a wish, which locally made Naija beverage will you like to see sold in Dominos?12. Have you ever received a call in a Nigerian number only for you to realise that it is an international call? This technique is called call masking and from what we gather it is a fraudulent move used by some Telco’s to reduce their International Termination Rates (ITR). Apparently, by masking the call as a local one, Telco’s pay Local Termination Rates (LTR) thus gaming each other. ITR rates are N24.4 compared to LTR which go for N3.9. NCC has been crying foul against the practice for months now and last week warned that it is spiking interconnection debt. Considering that nearly all Telco’s use this technique, one gets a feeling that it is actually the NCC that stands to lose the most from commissions.
Still on telecoms and for the records, MTN revealed last week that it has now paid N110bn to the Federal Government out of the N330bn fine imposed on it by the Nigerian Communications Commission two years ago. The fine is expected to be repaid over a three-year period. One we will some day get to see the utilization of this payment and hope it does not fall into range of any “snake”.
Recall a few weeks ago we reported that Petrobras was spinning off its Nigerian assets. Petrobras participates in two Nigerian oilfields, Akpo and Agbami, operated by French oil giant Total, producing a total of 368,000 barrels a day. Reports suggest Seplat is one of the companies bidding for this asset. Seplat share price has gained over 80% in the last one year and has returned back to its post IPO price. The company was loss making last year and is expected to eke out some profits this year.
In one of our earlier threads last year, we reported that Pale advisory, is perhaps one to track if you are looking to raise funds in Nigeria. The company helped secure $5m in funding from Milost Global Inc. for Prime Waterview. Last week, Japaul announced that it had entered into a binding commitment letter with Milost Global Inc. for a financing facility of $350 million under the Mesa Fund 1, a global opportunity fund that is managed by Milost Global Inc. Just like the Primewater deal, this one was arranged and negotiated by Palewater Advisory Group Inc. in New York and Banklink Africa Limited in Nigeria. Milost Global Inc. is an American Private Equity firm that is headquartered in New York City, with more than $25 billion in committed capital. Milost is also a provider of alternative capital, mezzanine finance, and alternative lending to a broad range of industries across the globe including Technology, Transport, Cannabis, Education, Distribution, Mining, Oil & Gas, Financial Services, Healthcare, Pharmaceuticals, Real Estate, Alternative Energy and Infrastructure Development. Palewater Advisory Group is a multinational corporate and public affairs advisory firm with headquarters in New York. Banklink Limited (hereinafter referred to as “Banklink Africa” or “Banklink”) is a financial proprietary enterprise incorporated in February 1999 in Nigeria.
Ever heard of All On Nigeria? If you are into renewable energy and don’t know them, then this is for you. The company funds Start-ups looking to create off-grid power solutions that are based on renewable energy. According to information on its website, it is “bringing together investors and access-to-energy providers to roll out solutions that are scalable and commercially sustainable.‏ By pooling our financial resources and technical know-how, we can tackle the complex challenges facing Nigeria’s energy market.” Last week it announced that it had reached financial closure with three renewable energy firms to quicken access to affordable and viable energy sources in the Niger Delta. The firms are Green Village Electricity, Lumos Global BV and Cold Hubs. The company CEO Dr. Boer Wiebe, said it would provide equity and debt funding to Port Harcourt based Green Village Electricity (GVE). The funding arrangement would enable GVE expand the offerings of its clean energy solutions in the Niger Delta and across Nigeria. For Lumos, it made an equity investment in them facilitate a quick rollout of its Solar Home Systems (SHS) in the Niger Delta. Coldhub will be receiving a convertible debt facility to enable it to expand its solar-powered marketplace cold storage business to new markets in the same region.