After First Aluminium Plc first hinted, last September, that it is considering voluntarily delisting its shares from the Nigerian Stock Exchange (NSE), it has now given reasons why.
According to a statement issued to the NSE and investing public at large, First Aluminium Plc explained that the decision to delist is not far from the fact that its shareholders are not benefiting from the company’s continued listing on the NSE, even as they are not getting exit opportunities either.
More so, First Aluminium lamented that its shares have continued to trade at a significant discount to the intrinsic value, stressing that over the last seven years, there has been little or no trading activity on the shares held by the minority shareholders.
According to the company:
“The share price was stuck at 50 kobo for about six years between June 2011 and June 2017, and thereafter experienced further diminution, both in share price and trading volumes. Over the last 18 months daily average volume ranged between 2,815 to roughly 2,918 units during the period July 2017 to December 2018. Shareholders are not benefiting from the continued listing as they are not getting exit opportunities and their investments have been locked up, thereby finding it difficult to dispose of their shareholding. Neither the company nor its shareholders have benefitted as the company’s shares continue to trade at a significant discount to the intrinsic value.”
Furthermore, rationalisation of operational expenses to support the company’s business and to meet the needs of various stakeholders, as well as the attendant costs required to comply with listing requirements such as filing fees, penalties/sanctions, are not commensurate with the benefits the company is getting from being on the NSE.
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Also, the increasingly competitive environment and the struggle to defend market share have resulted in market pressure to reduce price. This might significantly impact operating margin, the company said.
How the company will leverage on the delisting
The delisting will avail the company the opportunity to carry out an imminent corporate restructuring exercise to take advantage of emerging opportunities. It may consider re-listing the company in the future if the market conditions become favourable.
“The voluntary delisting will not occasion the loss of business opportunities as there are similar unlisted aluminium companies who are commanding a significant share of the aluminium market. Also, minority shareholders will not lose their shares because of the voluntary delisting and such shareholders may retain their membership in the unlisted company. However, through the Voluntary Delisting process, the minority shareholders – who do not wish to be members of an unlisted company – will have an opportunity to exit the Company, in accordance with the rules of the Nigerian Stock Exchange.”
The majority shareholders are the promoters of the transaction and offer other shareholders the opportunity to either remain shareholders of the unlisted company or accept a consideration for their shares which the majority shareholders are willing to purchase.
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Effect of the delisting
If and when First Aluminium Nigeria Plc eventually delists from the NSE, its shares will no longer be available for trading on the Nigerian bourse. It is envisaged that the delisted First Aluminium will continue its operations as an unlisted public company.
Recall that Nairametrics first reported the company’s impending delisting in September last year, after the company’s Management and Board first brought it up during the company’s 2018 AGM.
About First Aluminium Nigeria Plc
First Aluminium Nigeria Plc is one of the first Nigerian companies to be listed on the Nigerian Stock Exchange. It was listed in the daily official list of the NSE in 1992.
ALUCON Holdings S.A. holds roughly 75.48% of the current shareholding with minority
shareholders accounting for about 24.52%.