AIICO has kicked off another phase in its recapitalization strategy and submitted its application to the Nigerian Stock Exchange (NSE).
The application was to seek the approval and listing of 4,357,770,954 ordinary shares of Fifty Kobo (N0.50) each at Eighty Kobo (N0.80) per share, on the basis of five (5) new ordinary shares for every thirteen (13) ordinary shares held.
What it means: The Company’s shareholders now have the opportunity to increase their stake and position themselves for higher returns in a Company with excellent prospects.
AIICO’s recapitalization journey started in earnest when the insurance regulator, the National Insurance Commission (NAICOM) set a strategic plan to increase the capacity of the industry to take on more risks.
Responding to this, AIICO quickly articulated a clear path to meet the new minimum regulatory capital requirement. The Company followed through with regular communications at all stages in the execution of the strategy with its shareholders, who have been supportive of the efforts.
In February 2020, the Company completed its private placement successfully with 38.83% of its shares snapped up by two strategic investors; LeapFrog Nigeria Insurance Holdings Limited (28.24%) and AIICO Bahamas Nigeria Limited (10.59%), raising the share capital from N6.1bn to N11.3bn.
The Rights Issue is expected to generate N3.5billion, bringing the Company closer to meeting the required minimum paid-up capital of N18 billion. The exercise will be followed subsequently with a capitalisation (bonus) issue, which has a qualification date of 23 September 2020.
The industry, as with others, is facing daunting challenges as a result of the pandemic. As a result, NAICOM recently revised its recapitalization guidelines; 50% of the new minimum capital to be achieved by December 31, 2020, while the deadline for overall completion has been extended till September 30, 2021.
AIICO has however maintained an unbroken focus on its journey to its recapitalization. The Company also provided updates on the convertible loan instrument with the International Finance Corporation (IFC).
It obtained a loan of US$7million from the IFC on June 30, 2015, at an interest rate of 6.5% plus 6-month LIBOR for seven years with a moratorium period of 4 years on the principal.
The loan had an embedded derivative (a conversion option) whereby IFC had the right to convert all or a portion of the outstanding principal amount into the equivalent number of shares of the Company.
The loan repayment is in six (6) equal installments starting in March 2020 and is expected to end in September 2022 except if prepaid before then.
This convertible option, however, expired in December 2019 without the IFC exercising its option. Hence, the loan is now a straight loan without a conversion option till maturity.