The Board of Directors of Mutual Benefits Assurance Plc. has secured permission to raise the sum of N4.8 billion through private placement.

This is according to a disclosure signed by the company’s Secretary, Jide Ibitayo and seen by Nairametrics.

The disclosure is part of the resolutions reached at the Extra-Ordinary General Meeting of the firm and sent to the Nigerian Stock Exchange, dated December 3, 2020.

According to the information contained in the notification, the private placement worth N4.8 billion is to be raised through the sale of 8,888,888,889 ordinary shares of 50 kobo each of the company, at the rate of 54 kobo per share, in a distribution succinctly captured below:

• 5,331,004,445 units (approximately 60% of the total allotted units) is to be sold to Charles Enterprises LLC for about N2.88 billion.
• The remaining 3,557,844,444 (approximately 40% of the total allotted units) is to be sold to Arubiewe Farms Ltd for about N1.92 billion.

What this means

• According to Investopedia, a private placement is a sale of stock shares or bonds to pre-selected investors and institutions rather than on the open market. It is an alternative to an initial public offering (IPO) for a company seeking to raise capital for expansion.
• In this light, it is pertinent to note that private sales are now common for start-ups, as they allow the company to obtain the money they need to grow while delaying or foregoing an IPO.

What you should know

Other key resolutions reached at the Extra-Ordinary General Meeting include:

• Raising the company’s authorized share capital from N10 billion to N10.05 billion.
• To raise additional capital via the issue of debt or equity or a combination of both including convertible bonds, loans, stock, bonds with options etc.
• Amendment of clause 6 of the Memorandum and clause 5 of the Articles of Association of the company respectively.

Nigerian bourse closed negative on Thursday. The All Share index declined further by -0.25% to close at 34,968.94 from 35,056.82 points.

• Year-to-date and market capitalization similarly dropped by -0.25% to settle at 30.40% and N18.27 trillion respectively.
• A total volume of 289.3 million units of shares, valued at N7.34billion exchanged hands in 4,878 deals. UBA was the most traded shares by volume at 34.4 million units, while MTNN topped by value at N4.37billion.
• The market breadth index was negative with 25 losers against 13 gainers. CADBURY (-5.43%) led the laggards today, while ARDOVA (+7.69%) was the top gainer.
• The sectorial performance was mixed as the Banking, Insurance, and Consumer Goods indexes dipped -2.07%, -0.82%, and -0.20%, while the Oil & Gas gained +0.35%. The Industrial sector closed flat.

Top Gainers

1. MTNN up 0.77% to close at N156.2
2. ARDOVA up 7.69% to close at N14
3. REDSTAREX up 4.00% to close at N3.38
4. CUTIX up 5.56% to close at N1.9
5. UPL up 4.26% to close at N1.47

Top Losers

1. CADBURY down 5.43% to close at N8.7
2. UBA down 5.20% to close at N8.2
3. ZENITHBANK down 1.88% to close at N23.55
4. FLOURMILL down 1.85% to close at N26.5
5. GUARANTY down 1.47% to close at N33.6

Outlook

Nigerian stocks drifted lower at the fourth trading session of the week, as significant sell-offs seen in Nigerian tier -1 banks added pressure on the Nigerian All-Share Index.

• Stock experts anticipate more consolidation moves as investors become more choosy on stocks to buy taking into consideration that experts don’t see any new highs now till next year.
• That said, Nairametrics envisages cautious buying on the bias that stock traders are expected to be a bit wary amid recent macros prevailing at the Nigerian currency market.

Camey & Rock Business Consulting Limited has finally executed its share purchase agreement with the board of Resort Savings and Loans Plc, worth N4.3 billion.

This is according to a notification sent by the latter to the Nigerian Stock Exchange market yesterday and seen by Nairametrics.

The cash involved in the deal is scheduled to be injected in tranches. Also, activities related to the transactions are still ongoing.

In order to resolve some administrative and basic regulatory issues, Camey & Rock called for an extension from CBN to enable it conclude the recapitalization exercise of the bank outside the deadline of 31 December 2020 to 30 June 2021.

The call comes at a time when the investors plan to inject the next tranche of cash into the bank.

The notification also revealed that the investors (Camey & Rock) have so far, assisted in motivating staff resolution and arrangement of some critical financial obligations, towards the filing of outstanding financial statements and relocation of the bank’s head office to 12, Boyle Street, Lagos.

What they are saying: A part of the recent disclosure reads: “The Board of Resort Savings and Loans Plc (the bank) wishes to notify the Nigerian Stock Exchange and investing public on the updates on the Bank’s recapitalization exercise.

“The Bank has executed a Share Purchase Agreement with Camey & Rock Business Consulting Limited (Camey & Rock or the investor) to the tune of N4.3billion, following Camey & Rock’s strategic equity investment in the Bank. The cash will be injected into the Bank in tranches.”

Why it matters: The recent announcement will help recapitalize the bank. In addition, the board and management firmly believe that the strategic investment will change the face of the bank, repositioning it in the committee of financial services providers in Nigeria, and grow its capacity with consequent effect in increasing the wealth of stakeholders.