FBN Holdings Plc has announced its intention for a capital raise of up to N150 billion through a Rights Issue amid the rift among shareholders of the company.
The bank disclosed this in an amended notice of its 11th annual general meeting (AGM) to the Nigerian Exchange Limited (NGX) on Wednesdays, August 9, signed by the Acting Company’s Secretary, Adewale Arogundade.
“The company hereby wishes to notify the Nigerian Exchange Limited, shareholders and stakeholders that the agenda for the AGM has been amended to rephrase Resolutions 8 (b) and 8 (d) as follows and as detailed thereunder,” the notice read.
The rephrased resolutions read:
8 (b) – That there shall be a capital raise of up to N150,000,000,000.00 (One Hundred and Fifty Billion Naira. The capital raise transaction shall be by way of a Right Issue, on such terms and conditions and on such dates as may be determined by the Directors, subject to obtaining the approvals of the relevant regulatory authorities.
8 (d) – That any shares not taken up by existing shareholders within the period stipulated under the Rights Issue may be offered for sale to interested shareholders of the Company on such terms and conditions as may be determined by the Directors, subject to obtaining the approvals of relevant regulatory authorities.
The ICIR had reported that FBN Holdings had, in an earlier notice to the NGX dated July 19, also signed by Arogundade, revealed intentions to raise its Issued Share Capital from N17.95 billion to N22.43 billion by offering 8.97 billion shares via Rights Issue.
The earlier resolutions stated:
8 (b) – That there shall be a capital raise. The capital raise transaction shall be by way of a Rights Issue, on such terms and conditions and on such dates as may be determined by the Directors, subject to obtaining the approvals of the relevant regulatory authorities.
8 (d) – That the shareholders, pursuant to Resolution (c) above, hereby waive their preemptive rights to any unsubscribed shares under the Rights Issue in the event of an under-subscription.
Sharing his view, a capital market analyst and stock broker, David Adonri, said, “Revision of the Rights Issue from N22 billion to N150 billion is colossal.
“Perhaps they (the bank) feel that the shareholders can cough out that amount now that the secondary market is upbeat,” he added.
According to Adonri, it is also likely that with the depreciation of the Naira, previous assumptions belying earlier capital-raising plans have been thrown overboard.
He said, however, that since most stocks are trading at a premium in the secondary market, this might be the appropriate time for issuers to approach the primary market by offering a little discount.
“The move is a welcome development as it can facilitate a revival of the primary market while soaking away pressure from the apparently overheated secondary market,” he maintained.
Arising from the development, some shareholders have approached the court to stop the AGM and the bank from raising capital and admitting some directors onto the board.
The ICIR reported that the move led some minority shareholders on Monday, August 7, to rally support for the bank to hold its AGM virtually on August 15.