May & Baker Nigeria Plc has commenced rights issue of N2.45 billion in a bid to raise new capital. The rights issue opens on Monday, October 22, and closes on Wednesday, November 28, 2018. The company is planning to raise the new capital through new equity funds from existing shareholders.
The company is offering 980 million ordinary shares of 50 kobo each at N2.50 per share to existing shareholders. The rights issue has been provisionally pre-allotted on the basis of one new ordinary share for every one ordinary share held as at the close of business on Tuesday, September 4, 2018.
The opening of the application followed the approval of the rights issue by the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE).
Capital Assets Limited and Compass Investments & Securities Limited are the stockbrokers to the rights issue, while Cordros Capital Limited and Afrinvest (West Africa) Limited are the issuing houses.
Chairman, May & Baker Nigeria Plc, Lt. Gen Theophilus Danjuma (rtd), said the new equity funds would allow the company to harness new opportunities.
Recall that the shareholders of the company at its 67th Annual General Meeting which was held in Lagos gave their nod to the board’s bid to raise capital. At the meeting, a proposed dividend payment of 20 kobo per share was also approved by the management.
Issues around the new capital
It is rather interesting, yet puzzling that May & Baker Plc would even consider proceeding with dividend payment even when it is in apparent need of capital.
Recall that the company had earlier this year sold its food line to Dufil, a move the company said was necessary towards availing it the opportunity to access the much-needed capital towards the actualisation of its refocused business model.
Note that any truly concerned shareholder would understand the need to suspend dividend and plough profit back into sustaining a business when the need for that arises.
About May & Baker
May & Baker was founded in 1944 and it is one of Nigeria’s foremost companies and the first in the pharmaceutical industry. Its shares are listed on the Nigerian Stock Exchange (NSE) and are currently trading at N2.35, with a one year return of -9.62%.