Trading of the shares of Continental Reinsurance Plc has been suspended effective Thursday, 28 November 2019.
The development was announced by the Nigerian Stock exchange (NSE) through a statement issued on its website.
Why this matters: The suspension is to prevent further trading of the shares of the company beyond the effective date when the Certified True Copy (CTC) of the Court Sanction would be registered with the Corporate Affairs Commission of the Scheme of Arrangement, allowing CRe African Investments Limited (CRe Investments) acquire all the shares of Continental Reinsurance (CRe Nigeria).
What happened before now: The company’s shareholders met on December 20th, 2018 to deliberate on the takeover bid by the company’s core investors. The court-ordered meeting ended with shareholders approving the proposed takeover. Subsequently, “an application was submitted to the Securities and Exchange Commission for final approval for the scheme.”
The proposed scheme of arrangement was to allow the company’s core investor (CRe African Investments Limited) to buy out minority shareholdings.
However, further on into the acquisition, the company’s core investor chose to revise its proposal to acquire all outstanding and issued shares of Continental Reinsurance for a consideration of cash and shares.
A plan to restructure: According to Managing Director (MD) of Continental Reinsurance Plc (CRe), Dr Olufemi Oyetunji, the proposal to acquire minority shareholdings was in tandem with the company’s plans to transfer the various subsidiaries of the group to CRe Investments to enable CRe Nigeria shore up its balance sheets and capital required for maintaining and expanding the business.
Oyetunji noted that under the restructuring, Continental Reinsurance Nigeria’s shares would be transferred to Continental Reinsurance African Investments in exchange for shares in CRe Investments.
As consideration for the transfer of the shareholders’ shares in CRe Nigeria to CRe Investments under the new scheme, Oyetunji said shareholders have the option to receive one ordinary share of $1 each in the capital of CRe Investments for 176 ordinary share of 50 kobo each in the capital of CRe Nigeria as at the effective date.
The second option, Oyetunji said is for them to receive N2.04 per ordinary share of 50 kobo each held by the shareholders as at the effective date.
Oyetunji added that 92.66% of shareholders voted in favour of the restructuring, while 7.34% voted against it.
However, the scheme consideration was revised upward from N2.04 to N2.10 per share, with the new price representing 51.08% premium on the share price of Continental Reinsurance as at the close of trading on October 5, 2018; the last business day prior to the date on which the proposal was received from CRe African Investments Limited.
About CRe Investments: C-Re Holding, the majority shareholder is 49% owned by Capital Alliance Private Equity IV Limited, a private equity fund sponsored by African Capital Alliance (ACA). The remaining stake is held by Saham Finances SA (the insurance arm of Saham Group).
About CRe Nigeria: Continental Reinsurance (the company) was established in 1985 and listed on the Nigerian Stock Exchange (NSE) in 2007. It has operations in 44 African countries, with its main offices in Nigeria, Kenya, Cameroon, Côte d’Ivoire, Tunisia, and Gaborone.