• 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 Markets

C&I Leasing & ABRAAJ: Here is what’s wrong with this deal

Uche Ndimele by Uche Ndimele
January 12, 2019
in Markets, Spotlight, Stock Market
C&I Leasing Plc, Nigerian Stock Exchange, NSE, Suspension

C&I Leasing Plc

Share on FacebookShare on TwitterShare on Linkedin

One of the problems in the corporate world is what has come to be known as information asymmetry. Information asymmetry happens every day and everywhere. Information asymmetry is a situation where some relevant information are known to some but not to all.

Where asymmetric information exists, decision making ceases from being optimal and indeed becomes inefficient and leads to adverse selection.

The recent corporate actions being undertaken by C&I Leasing Plc seem to smack of some information asymmetry. First off, on the December 10th, 2018 filing to the Nigerian Stock Exchange by C&I Leasing Plc notifying the stock exchange and indeed its shareholders of its proposal to undertake a 1 for 4 reverse stock split or consolidation, the company noted that “The purpose of the reconstruction is to allow the company to have enough unissued shares to accommodate future plans to raise capital through the equity capital market.

RelatedStories

C&I Leasing issues N10 billion commercial paper: Takeaways for investors

C&I Leasing issues N10 billion commercial paper: Takeaways for investors

March 12, 2025
C&I Leasing

C&I leasing beats Q2 2024 profit forecast, Grows profit by 187%

September 9, 2024

The additional capital will be used to finance the company’s expansion plan, extinguish some liabilities and enhance the company’s capital mix”. In that filing, it was not explicit that the liability it intended to extinguish was a convertible bond.

Fast forward to the January 8th, 2019, notice to the Stock Exchange on the intention of ABRAAJ – managers of the Aureos Africa Fund to convert the loan stock to equity.

In that notification, C&I Leasing noted that “The purpose of the reconstruction was to allow the company to have enough unissued shares to accommodate the conversion of the Abraaj loan stock to ordinary shares……”.

This specificity does not seem to have been offered in the December 10th notification to the Stock Exchange and one wonders if it was specifically explained to the shareholders during the shareholders meeting.

One may argue that it does not make a difference whether the company converts its debt to equity or issues more shares and uses the proceeds to retire the debt. It does make a difference.

In the debt conversion scenario, existing shareholders do not have the opportunity to buy additional shares, (if they so wish) to maintain their proportionate ownership of the company while in the issuing of new shares, they have that opportunity, at least to maintain their existing ownership. Therein lies the dilutive effect of the debt equity conversion.

Diluted EPS Reporting

Ordinarily, when a company has a convertible debt in its books, such a company is required to anticipate possible conversion and as such report not only its basic earnings per share (EPS) on its financial statements but also its diluted earnings per share in anticipation of possible conversion.

An examination of the most recent financial statement from C&I Leasing, approved by the board on October 25th, 2018, did not indicate what the diluted earnings per share was even though they might have known that ABRAAJ might be converting the convertible debt.

Even the 2017 full year annual report only contains information on the basic earnings per share and nothing was said about the diluted earnings per share. I did not examine earlier financial reports, but chances are that they are silent on the diluted EPS.

International Financial Reporting Standards (IFRS)

Most Nigerian companies like C&I Leasing plc, follow the International Financial Reporting Standards (IFRS) and as such should be guided by the provisions of IAS 33 as amended. IAS 33 sets out, among other things, the calculation and presentation of earnings per share for publicly traded companies. IAS 33.66 specifies that publicly traded companies must present on the face of the statement of comprehensive income, basic and diluted EPS.

Many Unanswered Questions

The questions worth pondering are, did the company, its directors, and auditors not know that there was convertible debt in the books? Did they not know of the requirement that when such liabilities are in the books, the impact of conversion should be anticipated and properly reflected in the diluted earnings per share numbers or was this omission intentional? How many other companies in Nigeria are in the habit of not reporting such numbers when they should? Why did the Stock Exchange not require them to indicate to the shareholders the effect of possible conversion on the diluted EPS.

Given the level of financial literacy in Nigeria, corporate citizens should do more to reduce information asymmetry so that relevant parties to transactions could make optimal decisions.


Follow us for Breaking News and Market Intelligence.
Tags: ABRAAJC&I LeasingOn the Money
Uche Ndimele

Uche Ndimele

Uchenna Ndimele is the President of Quantitative Financial Analytics Ltd. MutualfundsAfrica.com and mutualfundsnigeria.com (both Quantitative Financial Analytics company website) is a leader in supplying mutual fund information, analysis, and commentary on African mutual funds. We provide reliable fund data; and ratings information that will add value to fund managers, the media, individual investors and investment clubs.

Related Posts

C&I Leasing issues N10 billion commercial paper: Takeaways for investors
Financial Analysis

C&I Leasing issues N10 billion commercial paper: Takeaways for investors

March 12, 2025
C&I Leasing
Blurb

C&I leasing beats Q2 2024 profit forecast, Grows profit by 187%

September 9, 2024
C&I Leasing
Corporate Updates

C&I Leasing reports N23.96 billion as gross earnings in 2023

February 15, 2024
In Nigeria only 50,000km out of every 200,000km of road networks are paved in the country
Exclusives

In Nigeria only 50,000km out of every 200,000km of road networks are paved – C&I Leasing’s CEO Lenin Ugoji

March 10, 2023
Valentine's day business ideas
Financial Literacy

Businesses that will profit from today’s Valentine’s Day celebrations

February 14, 2023
How to grow your customer base, keep your business in demand (Part 1) 
Financial Literacy

How to grow your customer base, keep your business in demand (Part 1) 

October 10, 2022
Next Post
Cornerstone Insurance leads this week’s gainers as NSE closes on negative note

Julius Berger leads top gainers for the week

Comments 3

  1. Oluwayemi says:
    January 12, 2019 at 10:11 pm

    Hello Nairametrics…. My name is Oluwayemi. I bought shares in MRS and I was happy when they declared bonus shares in early 2018. I attended the AGM around August and this is almost one year. I have not received my bonus shares from the company and neither is there information as to why I have not received the declared and approved bonus shares.

    Please do not hesitate to lecture me if my ignorance is responsible to me writing this.

    Thank you.

    Reply
    • Onome Ohwovoriole says:
      January 13, 2019 at 7:42 am

      When specifically did you buy the shares? Please contact the company’s registrars.

      Reply
    • uchenna Ndimele says:
      January 13, 2019 at 6:12 pm

      In those days when share certificates used to be issued, (not sure if that still happens in Nigeria), you will receive a new certificate showing your new share ownership which will include your bonus issues. However, following the Dematerialization exercise that that converted physical share certificates to electronic mode, you can verify from your broker or registrar. Have you been receiving your investment statement from your broker, if yes, check to see if there is a change in quantity, otherwise contact the broker and/or the registrar. Good luck

      Reply

Leave a Reply Cancel reply

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

Emple
nlng
first bank
Zenth Bank








DUNS

Recent News

  • WAES: West Africa exported goods valued at over $166 billion in 2024 – Tuggar 
  • Heineken withdraws staff, suspends operations in Eastern DRC cities amid worsening rebel conflict 
  • Tariff relief triggers $2 billion investment in Nigeria’s digital infrastructure – Tayo Aduloju

Follow us on social media:

Recent News

Yusuf Tuggar, Nigerian military

WAES: West Africa exported goods valued at over $166 billion in 2024 – Tuggar 

June 21, 2025
Heineken launches mandatory takeover bid of Champions Breweries, offers to buyout remaining 15.3% equity stake

Heineken withdraws staff, suspends operations in Eastern DRC cities amid worsening rebel conflict 

June 21, 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