By Peter Egwuatu
The Oando Plc Rights Issue which opened three weeks agoÂ is expected to close on Friday. The offer which broughtÂ excitement at the stock market when the management ofÂ Oando Plc announced plans to float a Rights Issue after the lull experienced in the marketÂ last yearÂ is expected to boost transaction at the Exchange .
Specifically, the ongoing Oando Plc N21.118 billion Rights Issue which opened on January 25 is scheduled to close on February19, 2010.
The offer is the first bigger issue since the stock market started recovery this year, a development stockbrokers said, â€œ It is an opener for investors that company like Oando still believes that the market has the capacity.
The offer no doubt will energize the market and attract more offers as confidence improves. We hope that the offer will be fully subscribed.â€
Stockbrokers that spoke in different interviews complained of illiquidity, adding â€œit has not affected shareholders who kept demanding for their Rights Issue applications.â€
According to them, â€œ Some of the shareholders that could not afford to pay cash to exercise their rights demanded that we help trade it for them. So in that regard, we are of the view that the offer would be fully subscribed.â€|
Rev.Olu Odejimi, doyen of stockbrokers said, â€œ A good wine needs no introduction. The offer is a good one coming from a viable company with very sound fundamentals. We believe that existing shareholdersÂ will surely take their rights because it is a juicy offer. We see the offering to be very successful. Oando has track record and the company is doing well. A good offer can sell any time. So we are confident that the Issue will be fully subscribed.â€
Oando Plc has an authorised share capital of one billion comprising 2 billion ordinary shares of 50 kobo each with issued and fully paid up capital of N452,542,314 comprising 905,084,628 ordinary shares of 50 kobo each.
The company is presently offering 301,694 876 ordinary shares of 50 kobo each to its existing shareholders at N70 per share. The offer price of N70 isÂ already offering an instant 24 per cent capital gain for investors who take up their Rights.
The company share is currently being traded at N93.99 per share at the secondary market. This is theÂ price at which the Nigerian Stock Exchange (NSE) placed technical suspension on the share when the company notifiedÂ it of its intention to float a Rights Issue.
The implication is that the price of the share cannot move beyond N93.99 per share until the technical suspension is lifted.
The technical suspension placed on the price of the shareÂ is a normal practice adopted by the Exchange when any quoted company is coming out with any offer. The technical suspension is also meant to give investors equal opportunity and preventÂ insider knowledge abuse.
The major parties to the Issue include: Vetiva Capital Market Limited as lead Issuing House and FCMB Capital Markets Limited and Stanbic IBTC Bank Plc as joint Issuing Houses.
First Registrars Nigeria Limited as registrar to the Issue; PriceWater HouseCoopers as Chartered Accountants; Vetiva Securities Limited, CSL Stockbrokers Limited, Stanbic IBTC Stockbrokers Limited as joint stockbrokers to the offer.
Meanwhile, the Group Chief Executive Officer ofÂ Oando Plc, Mr. Wale Tinubu, said that existing shareholders who may not be able to exercise their rights will not lose out completely as they can trade their rights on the floor of the NSE.
â€œ The Rights Issue is very important for the company as it will help refinance the acquisition of upstream asset,Â provide additional capital to fund the operation of the upstream businessÂ and also short and medium term investments in its gas and power business segment.â€ he declared.
According to him, â€œThe net Rights Issue proceeds is estimated at N20.437 billion after deducting the total cost of the Issue estimated at N681, 312 million, (representing 3.23 per cent of the Issue), will be applied as follows :
Upstream Assets Refinancing N14.919 billion; Operational Capital Development and Upstream Business Development N3.883 billion; Technology N3.658 billion; People N225 million and Working capital N1.634 billion.â€
â€œGiven the future prospects in the company and the incentives the rights issue price offer, we are confident that all our shareholders will use this opportunity to increase their share holding in the company. But should thereÂ be any shareholder who may be prevented by one reason or the other from being able to take up their rights, they can trade the rights on the floor. By doing so they will not be losing out completely,â€ he said.
The chief executive officers of some banks and shareholders had recently pledged their support for the offer. For instance, the Group Managing Director of First Bank of Nigeria Plc, Mr. Bisi Onasanya, said the offer was desirable assuring that banks are always there to support Oandoâ€™sÂ operations.
â€˜â€™On behalf of First Bank, I endorse the offer, which I think is desirable. The banks are always there and ready to supply you with funds. I want to assure you that banks are still lending and we are never afraid to take risks. We want you to increase your participation in the upstream sector because of the fuel scarcity in the country,â€™â€™ he said.