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UAC, UPDC jointly announce recapitalisation and restructuring plans

The Boards of Directors of UAC and UPDC, have announced plans to carry out some initiatives involving a recapitalisation and restructuring of UPDC.

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UACN, UAC Nigeria’s Dividend Payment Might Not Be Worth The Struggle

The Boards of Directors of UAC of Nigeria Plc (UAC) and UACN Property Development Company Plc (UPDC), have jointly announced plans to carry out some strategic initiatives involving a recapitalisation and restructuring of UPDC.

These initiatives are subject to the review and approval of the Securities and Exchange Commission (SEC), the Nigerian Stock Exchange (NSE), and shareholders of both companies.

UPDC’s initiatives: UPDC commenced operations as a department and subsequently a division within UAC focused on managing UAC’s real estate holdings. In 1997, UPDC was incorporated as a public limited liability company and certain assets held by UAC were transferred to UPDC via a scheme of arrangement: UPDC’s shares were listed on The NSE on 19 November 1998.

Over the years, UPDC grew to become one of Nigeria’s leading indigenous real estate companies, engaged in a broad range of activities including property development for sale and lease, facilities management, hospitality and retail. UPDC has built a long-standing track record, having completed multiple landmark residential and commercial developments.

[READ MORE: Folakemi Fadahunsi announced as UACN’s new Director]

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UPDC’s recent expansion coincided with the recession that impacted Nigeria in 2016 affecting overall economic activity. The real estate sector was particularly affected with significant declines in asset values and rental rates. Nigeria’s broader economy emerged from recession in Q4 2017; however, the real estate sector has continued to struggle, with declining investment values, reduced demand for assets, and high vacancy rates. UPDC has been negatively impacted by the extended decline in the Nigerian real estate sector recording losses annually since 2016. In addition, the Company struggles with high levels of debt, which combined with declining revenues and profitability have resulted in cashflow challenges to meet its obligations. UPDC’s underperformance has resulted in a decline in equity value and restricted the Company’s ability to pay dividends.

United Africa Company of Nigeria Plc

The Board and management at UPDC have focused on developing strategies to stabilize UPDC’s capital structure and unlock value for shareholders. Two significant strategic initiatives are currently proposed, a recapitalization and a concurrent restructuring.

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The recapitalisation: This involves an equity capital raise of N15.96 billion by way of a rights issue to repay its short-term debt obligations. For UPDC to attain sustainability, the focus is on reducing outstanding debt to a level at which it is serviceable from recurring cash flows. This will require a significant cash injection which is to be raised through the Rights Issue.

Post the Rights Issue, UPDC’s only interest-bearing obligation will be its long-term bond with total outstanding balance of N4.3 billion.

Restructuring: An ownership structure reorganization, that will involve UPDC’s interest in UPDC Real Estate Investment Trust (UPDC REIT or the “REIT”) being unbundled to UPDC shareholders via the allocation of REIT units directly to shareholders of UPDC in proportion to their post-Rights Issue holdings in UPDC (“UPDC Unbundling’).

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The REIT was listed at N10 per unit in July 2013 and traded at N5.40 per unit as at 2 September 2019, a 46% decline in value. In spite of a track record of dividend payments, the diminution in unit price has resulted in an erosion of unit-holders value. In addition to investor concerns around operations and management of the REIT, an often-cited challenge has been limited liquidity with UPDC owning more than 60% of the units in the REIT. The restructuring is expected to materially increase free float and liquidity in REIT units.

A second component of the restructuring is the immediate release of value to UPDC shareholders, who will benefit from a direct interest in the UPDC REIT, which is profitable and has a track record of dividend payments. Since 2016, UPDC has received about N3 billion in aggregate dividends from its investment in the REIT; however, on account of the Company’s challenges, it has paid no dividends to its own shareholders over the same period. Post the proposed restructuring, any future dividends from the REIT will flow directly to UPDC shareholders.

[READ MORE: Imperial Logistics increases stake in UACN’s subsidiary, MDS Logistics in a $40 million deal]

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As a consequence of the UPDC Unbundling, UPDC shareholders will be allocated an asset with a current market value of N8.9 billion i.e. value of UPDC’s units in the REIT based on current market prices on The NSE. UPDC’s share of the REIT’s 2018 dividends amounted to N936 million and similar dividends will flow directly to shareholders of UPDC. UPDC carries its interest in the REIT at N20.6 billion which is its share of the REIT’s Net Asset Value. The N11.7 billion difference between the carrying and listed values of UPDC’s interest in the REIT will be passed through UPDC’s accounts as a non-cash charge.

UAC Initiatives: On the other hand, the Board and management of UAC are in the process of a strategic review, evaluating the performance of UAC and its subsidiaries. The objective is to achieve sustainable positive financial performance from its existing operations and enable management focus on businesses that align with its strategy.

UACN Property Development Company Plc

In reviewing UPDC, the Board looked at the long-term opportunities in the Nigerian real estate sector as against the fundamental differences between the cashflow profile and capital needs of UPDC versus other entities in UAC’s portfolio. Following its review, the Board concluded that it would be in the best interest of respective stakeholders of UAC and UPDC if UAC’s equity interest in UPDC is ‘unbundled’ such that UAC no longer holds any shares in UPDC (UAC Unbundling), and UPDC operates as a standalone legal entity, free to source appropriately structured capital.

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Pursuant to the UAC Unbundling, the ordinary shares that UAC holds in UPDC post-Rights Issue will be transferred pro-rata to all UAC shareholders, who will hold such UPDC shares in addition to their existing equity interests in UAC. UAC will cease to be a shareholder in UPDC, and UPDC will cease to be consolidated UAC’s financial statements.

[READ MORE: UACN’s Shareholders endorse N1.8 billion dividend payout]

On account of UPDC’s unbundling of its interest in the UPDC REIT, post the implementation of the respective strategic initiatives described above, each UAC shareholder will hold shares in three separate entities – UAC, UPDC and the UPDC REIT benefitting from the future prospects of each.

UAC intends to support the Rights Issue such that the standalone UPDC has a much healthier balance sheet.

Consequences of the UAC Unbundling and UPDC Unbundling: If the Rights Issue, UPDC Unbundling and UAC Unbundling are successfully implemented (following the approvals of Regulators and shareholders), it is expected that:

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  1. UPDC will no longer own any units in the REIT. UPDC REIT will cease to be an associate company of UPDC
  2. UPDC shareholders will become direct unitholders in the UPDC REIT in addition to their shares in UPDC
  3. UPDC will cease to be a subsidiary of UAC
  4. UAC shareholders will become direct holders of shares in UPDC and units in the UPDC REIT

[READ MORE: UACN gets new Executive Director, Ajumogobia out]

Famuyiwa Damilare is a trained journalist. He holds a Higher National Diploma (HND) in Mass Communication at the prestigious Nigerian Institute of Journalism (NIJ). Damilare is an innovative and transformational leader with broad-based expertise in journalism and media practice at large. He has explored his proven ability in the areas of reporting, curating and generating contents, creatively establishing social media engagements, and mobile editing of videos. It is safe to say he’s a multimedia journalist.

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Economy & Politics

WTO Job: Okonjo-Iweala reveals how to resolve the rift between US and China

Mrs Iweala revealed how she hopes to resolve the rift between the United States of America and China.

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WTO, Okonjo-Iweala joins South Africa's presidential economic advisory council as nation struggles with recession

As the jostle for the top job at the World Trade Organization (WTO) becomes more intense, the Nigerian candidate, Ngozi Okonjo-Iweala, has disclosed some of her plans for the institution. The former Nigerian Finance Minister recently had an exclusive interview with CNBC Africa.

Speaking during the interview, Mrs Iweala revealed how she hopes to resolve the rift between the United States of America and China, the 2 biggest economies in the world, especially as regards trade issues. She also noted that part of her vision is to build a trade institution where there is greater trust among its members. She also stressed that the WTO, at this critical time, is needed to ensure that trade and global markets remain open.

On healing the rift between the US and China, Okonjo-Iweala admitted that it is going to be challenging and not be easy. She said:

Well this is not going to be easy, if it was easy, it could have been done a long time since. So it would be very challenging but it is not an impossible job. It is very clear that both the US and China have been helped and benefitted from the multilateral trading system in the past. Hundreds of millions have been lifted out of poverty. They have experienced shared prosperity in the economies and their countries.’

The Nigerian candidate pointed out that it is important to remind the US and China of this shared prosperity. She then disclosed that she would listen to both countries to find out what really are the issues causing distrust among them. She said that she will not want to be involved in the larger political problems, but will rather separate the trade issues and focus on them and build this trust.

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Going further on how to settle their rift, Okonjo-Iweala said, “You need to begin to find areas where there can be confidence-building and trade. Building trust is not talking about it, you have to have areas where both can work together and agree and we have a golden opportunity in the fisheries subsidies negotiations that are going on now because the US is a party to it, China is a party, the EU, all other members.’’

“It is a multilateral negotiation, so if they can sit around the table with others to negotiate this and have a successful outcome, that is one thing that will be shared in common between the 2. So that will begin to build confidence. Then reaching out both in the US and in China to talk to the policymakers, go where the decisions are made, talk to congress also in the US and begin to show the benefits of the system again.’’

She also said they will look at reasons why they need to work together because their rift may be causing negative externalities for other members. She is of the opinion that exposing all of these, working with them, and listening carefully will begin to build confidence.

She believes that while achieving this will be difficult, focusing seriously on trade issues can create room for a breakthrough.

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Coronavirus

US hands over 200 ventilators to Nigeria

The US Ambassador to Nigeria said USAID and  Nigeria will work very closely over the next couple of weeks.

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The United States of America, on Tuesday, August 11th, handed over some 200 ventilators to the Federal Government of Nigeria. This was disclosed by the Federal Ministry of Health via its Twitter handle, following the handover ceremony in Abuja.

The US Ambassador to Nigeria, Ambassador Mary Beth Leonard, at the handover event, explained that the ventilators are compact & portable & can be easily mobilized to reach those patients with the most severe symptoms of COVID-19.

Speaking during the handover ceremony, the Ambassador said, “Their arrival fulfills the commitment discussed between US and President Muhammadu Buhari earlier this year. Our support includes; training on the use & maintenance of this equipment, ensuring that the ventilators can address other respiratory illnesses in the years beyond.”

According to her, the United States Agency for International Development (USAID) and  Nigeria will work very closely and energetically over the next couple of weeks, with the Presidential Taskforce on COVID-19, to bring these ventilators across each of Nigeria’s states & the Federal Capital Territory.

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“The United States has been pivotal in supporting Nigeria’s membership in the ‘Every Breath Counts’ Coalition. Nigeria is now one of 2 countries in Africa to have an “oxygen roadmap” that seeks to fight against pneumonia, hypoxemia, & now COVID-19,” she stated. She then added that as the U.S. Ambassador to Nigeria, she remains proud of the strong friendship between the two countries.

The Backstory: Last April, Nairametrics had reported when the Minister of Information, Lai Mohammed, said that “President Donald Trump assured that the United States stands in solidarity with Nigeria in this difficult time and promised to send ventilators to support the country in its fight against the pandemic.”

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Coronavirus

COVID-19 Update in Nigeria

On the 11th of August 2020, 423 new confirmed cases and 6 deaths were recorded in Nigeria.

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The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to record significant increase as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 47,290 confirmed cases.

On the 11th of August 2020, 423 new confirmed cases and 6 deaths were recorded in Nigeria, having carried out a total daily test of 2,355 samples across the country.

To date, 47,290 cases have been confirmed, 33,609 cases have been discharged and 956 deaths have been recorded in 36 states and the Federal Capital Territory. A total of 319,851 tests have been carried out as of August 11th, 2020 compared to 317,496 tests a day earlier.

COVID-19 Case Updates- 11th August 2020,

  • Total Number of Cases – 47,290
  • Total Number Discharged – 33,609
  • Total Deaths – 956
  • Total Tests Carried out – 319,851

According to the NCDC, the 423 new cases were reported from 22 states- Lagos (117), FCT (40), Ondo (35), Rivers (28), Osun (24), Benue (21), Abia (19), Ogun (19), Ebonyi (18), Delta (17), Kwara (17), Kaduna (15), Anambra (14), Ekiti (11), Kano (9), Imo (6), Gombe (4), Oyo (3), Taraba (3), Bauchi (1), Edo (1) and Nasarawa (1).

Meanwhile, the latest numbers bring Lagos state total confirmed cases to 16,074, followed by Abuja (4,525), Oyo (2,890), Edo (2,399), Rivers (1,972), Kano (1,643), Kaduna (1,628), Delta (1,613), Plateau (1,584), Ogun (1,497), Ondo (1,324), Enugu (914), Ebonyi (888), Kwara (882), Katsina (746), Borno (690), Abia (663), Osun (652), Gombe (635),  and Bauchi (578).

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Imo State has recorded 485 cases, Benue (430), Nasarawa (371), Bayelsa (346),  Jigawa (322), Akwa Ibom (235), Niger (226), Ekiti (193), Adamawa (185), Anambra (156), Sokoto (154),  Kebbi (90), Taraba (78),  Zamfara (77), Cross River (73), Yobe (67), while Kogi state has recorded 5 cases only.

READ ALSO: COVID-19: Western diplomats warn of disease explosion, poor handling by government

Lock Down and Curfew

In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.

The movement restriction, which was extended by another two-weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, Nigeria’s President, Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.

On Monday, 29th June 2020 the federal government extended the second phase of the eased lockdown by 4 weeks and approved interstate movement outside curfew hours with effect from July 1, 2020. Also, on Monday 27th July 2020, the federal government extended the second phase of eased lockdown by an additional one week.

On Thursday, 6th August 2020 the federal government through the secretary to the Government of the Federation (SGF) and Chairman of the Presidential Task Force (PTF) on COVID-19 announced the extension of the second phase of eased lockdown by another four (4) weeks.

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READ ALSO: Bill Gates says Trump’s WHO funding suspension is dangerous

DateConfirmed caseNew casesTotal deathsNew deathsTotal recoveryActive casesCritical cases
August 11, 202047290423956633609127257
August 10, 202046867290950533346125717
August 9, 202046577437945333186124467
August 8, 202046140453942633044121547
August 7, 202045687443936632637121147
August 6, 202045244354930332430118847
August 5, 2020448904579271732165117987
August 4, 2020444333049101431851116727
August 3, 202044129288896820663225707
August 2, 202043841304888520308226457
August 1, 202043537386883420287225677
July 31, 202043151462879119565227077
July 30, 202042689481878519270225417
July 29, 202042208404873519004223317
July 28, 202041804624868818764221727
July 27, 202041180648860218203221177
July 26, 202040532555858217374223007
July 25, 2020399774388561116948221737
July 24, 2020395395918451216559221357
July 23, 2020389486048332016061220547
July 22, 202038344543813815815217167
July 21, 202037801576805415677213197
July 20, 2020372255628011215333210917
July 19, 2020366635567891115105207697
July 18, 202036107653778614938203917
July 17, 202035454600772314633200497
July 16, 202034854595769914292197937
July 15, 202034259643760613999195007
July 14, 2020336164637541013792190707
July 13, 202033153595744413671187387
July 12, 2020325585717401613447183717
July 11, 2020319876647241513103181607
July 10, 2020313235757092012795178197
July 9, 202030748499689512546175137
July 8, 2020302494606841512373171927
July 7, 2020297895036691512108170127
July 6, 202029286575654911828168047
July 5, 2020287115446451111665164017
July 4, 202028167603634611462160717
July 3, 2020275644546281211069158677
July 2, 2020271106266161310801156937
July 1, 2020264847906031310152157297
June 30, 202025694561590179746153587
June 29, 20202513356657389402151587
June 28, 20202486749056579007149957
June 27, 20202407777955848625148947
June 26, 20202329868455458253144917
June 25, 20202261459454977822142437
June 24, 20202202064954297613138657
June 23, 20202137145253387338135007
June 22, 20202091967552577109132857
June 21, 202020242436518126879128477
June 20, 202019808661506196718125847
June 19, 202019147667487126581120797
June 18, 20201848074547566307116987
June 17, 202017735587469145967112997
June 16, 202017148490455315623110707
June 15, 20201665857342445349108857
June 14, 202016085403420135220104457
June 13, 20201568250140785101101747
June 12, 20201518162739912489198917
June 11, 2020145546813875449496737
June 10, 20201387340938217435191407
June 9, 2020134646633654420688937
June 8, 2020128013153617404084007
June 7, 20201248626035412395981737
June 6, 2020122333893429382680657
June 5, 20201184432833310369678157
June 4, 2020115163503238353576467
June 3, 2020111663483151332975227
June 2, 20201081924131415323972667
June 1, 20201057841629912312271579
May 31, 20201016230728714300768687
May 30, 2020985555327312285667267
May 29, 202093023872612269763447
May 28, 202089151822595259260647
May 27, 202087333892545250159787
May 26, 2020834427624916238557107
May 25, 202080682292337231155247
May 24, 202078393132265226353607
May 23, 202075262652210217451317
May 22, 2020726124522110200750337
May 21, 2020701633921111190748987
May 20, 202066772842008184046377
May 19, 202064012261921173444757
May 18, 202061752161919164443407
May 17, 202059593881826159441837
May 16, 202056211761765147239737
May 15, 202054452881713132039544
May 14, 202051621931683118038154
May 13, 202049711841646107037374
May 12, 20204787146158695936704
May 11, 202046412421521090235894
May 10, 202043992481421777834794
May 9, 202041512391271174532784
May 8, 202039123861181067931154
May 7, 20203526381108460128184
May 6, 20203145195104553425071
May 5, 2020295014899548123704
May 4, 2020280224594641722912
May 3, 2020255817088240020702
May 2, 20202388220861735119522
May 1, 20202170238691035117512
April 30, 2020193220459731715562
April 29, 2020172819652730713692
April 28, 2020153219545425512322
April 27, 20201337644102559942
April 26, 20201273914152399942
April 25, 20201182873632229252
April 24, 202010951143312088552
April 23, 20209811083231977532
April 22, 2020873912931976482
April 21, 20207821172631975602
April 20, 2020665382311884662
April 19, 2020627862221704362
April 18, 2020541482021663562
April 17, 2020493511841593172
April 16, 2020442351311522772
April 15, 2020407341211282672
April 14, 202037330111992632
April 13, 202034320100912422
April 12, 20203235100852282
April 11, 202031813103702382
April 10, 20203051770582402
April 9, 20202881471512302
April 8, 20202742260442262
April 7, 20202541661442042
April 6, 2020238650351982
April 5, 20202321851331942
April 4, 2020214540251850
April 3, 20202092542251800
April 2, 20201841020201620
April 1, 2020174352091630
March 31, 202013982091280
March 30, 2020131202181210
March 29, 2020111221031070
March 28, 20208919103850
March 27, 2020705103660
March 26, 20206514102620
March 25, 2020517102480
March 24, 2020444102410
March 23, 20204010112370
March 22, 2020308002280
March 21, 20202210001210
March 20, 2020124001110
March 19, 20208000170
March 18, 20208500170
March 17, 20203100030
March 16, 20202000020
March 15, 20202000020
March 14, 20202000020
March 13, 20202000020
March 12, 20202000020
March 11, 20202000020
March 10, 20202000020
March 9, 20202100020
March 8, 20201000010
March 7, 20201000010
March 6, 20201000010
March 5, 20201000010
March 4, 20201000010
March 3, 20201000010
March 2, 20201000010
March 1, 20201000010
February 29, 20201000010
February 28, 20201100010

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