Why C&I Leasing shares have been placed on suspension

The nation’s bourse, the Nigerian Stock Exchange (NSE) yesterday placed full suspension on trading in the shares of C & I Leasing Plc.

According to NSE, this is to facilitate the ongoing share reconstruction of the leasing company. The full suspension is expected to remain until December 27, 2018 during which there will be no trading and price movement on the shares of C & I Leasing.

The full suspension will also enable the company’s registrars to update the register of shareholders for the planned share consolidation.

Recall that C & I Leasing revealed plans to reduce its paid up share capital by 80 per cent in a share capital reconstruction that will see cancellation of 1.506 billion ordinary shares.

According to the plan, four ordinary shares of 50 kobo each will be consolidated into one ordinary share of 50 kobo each. The reconstruction will reduce C & I Leasing’s current outstanding share capital of 1.883 billion ordinary shares of 50 kobo each to 376.56 million ordinary shares of 50 kobo each.

Share Consolidation

This means a reverse stock split whereby a company reduces the total number of its outstanding shares in the open market.

Growing concern by investors

Shares of the company plummeted 8 per cent since it secured regulatory approval last month for its stock consolidation wiping out some N200 million from the company’s market value. On Wednesday this week, the share price fell to N1.78 from N1.94 on Monday. This saw the a drop in the market value by 5 per cent to N3.4 billion from N3.6 billion.

For investors in the company, this will affect the volume of their stock holdings and not the value. For instance an investor with a million units of shares valued at N2 each, the aggregate value remains N2 million after the consolidation but the volume is down to 250,000 units of shares.

C & I Leasing Plc has been in operation for over two decades and has since evolved from being a finance leasing company licensed by the Central Bank of Nigeria (CBN) in 1991 to becoming a diversified, leasing and business service conglomerate, providing support services to various indigenous and multinational organisations in West Africa along three lines: Fleet Management, Personnel Outsourcing and Marine Services.