Shareholders have approved a proposal to merge five of Flour Mills Plc’s subsidiaries with the holding company. This will be carried out under a Scheme of External Restructuring, the company said.
The resolution was reached on Wednesday, during a court-ordered meeting in Lagos. During the meeting, shareholders stressed the need that the restructuring exercise be carried out in a manner that is beneficial to the entire group.
A closer look at the approved proposal
In line with the approvals, all the assets previously belonging to the fertiliser arm of the Group, will now be transferred to Golden Fertiliser. In the same vein, Golden Fertiliser will take up all the pending court cases pertaining to the fertiliser arm of Flour Mills Plc.
“That all the assets, liabilities and undertakings of the fertiliser business of Flour Mills, including but not limited to real property, equipment and machinery, plant, fixtures and fittings, motor vehicles, businesses, intellectual property rights, licenses, permits, credits and allowances be transferred to Golden Fertiliser.
“That all legal proceedings, claims and litigation matters pertaining to the fertiliser business of Flour Mills either pending or contemplated by or against Flour Mills be continued by or against Golden Fertiliser after the Scheme is sanctioned by the Court.”
A move in the right direction?
For many shareholders, the decision to approve the merger is a move in the right direction. According to the National Coordinator of Independent Shareholders Association of Nigeria (ISAN), Mr Adebisi Adeniyi, the move will result in more profitability.
“We commend the Board and Management for the restructuring exercise, as we hope it will lead to higher profitability. We also hope it will not affect the existing employees and shareholding structure.”
The Chairman of Golden Fertilizer Company Limited, Paul Miyonmide Gbededo, also agreed. He assured that the shareholders’ approval to merge the five subsidiaries will guarantee maximum returns on their investments. He also added that the merger was needed to streamline operations and reduce administrative costs.
“The enlarged FMN, upon completion of the restructuring would be able to eliminate transfer costs of materials, and operate at a higher level of efficiency, which will drive down costs, make product pricing more competitive, improve profitability and enhance the bottom line for the benefit of all stakeholders.
“It will enable each of the value chain in FMN Group to target appropriate investors and markets attracted to the specific businesses. It will increase the capital allocation capacity and flexibility of the Flour Mills Group, as each group will be able to attract new capital targeted at the specific opportunities of the respective businesses.”
Flour Mills Nigeria Plc is a Nigerian company with diversified business operations cutting across such areas as food, fertiliser, and agricultural produce. It was listed on the Nigerian Stock Exchange in 1979 and its stock is currently trading at N19.