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Cadbury shareholders set for N22.2bn rights issue

By Peter Egwuatu
Shareholders of  Cadbury Nigeria Plc are set to take opportunities from the company’s proposed rights issue which  opened on Wednesday.|

Stanbic IBTC Bank Plc is the issuing house to the rights issue, which is expected to raise the sum of N22.2 billion.
According to the rights issue document, Cadbury is offering  2.57 billion ordinary shares to be distributed in the ratio of seven new ordinary shares for every three held as at 26 June 2009.

However, Vanguard gathered that the challenge for the existing Nigerian  shareholders was the issue of timing of the issue, as it is coming at a time the economy is undergoing a recession. Nigerian investors, according to stockbriokers are afraid of losing part of their shareholding to Cadbury U.K, the parent company and majority shareholder, in the event that  all of them do not take up their rights in full.

For those who depend on borrowing to buy shares, they may have problems at this critical period now that banks are not willing to grant loans for share purchases. But the shareholders who spoke with Vanguard have assured of their participation.

The company in the offer prospectus stated that the net proceeds of the rights issue will be used to repay bank borrowings, thus reducing its interest burden and the balance of the issue proceeds will be applied to fund the the company’s capacity supporting infrastructure, efficiency initiatives and upgrade other facilities.Although,   stockbrokers have said that  the price of the rights issue was fair, but they wondered whether majority of Nigeria shareholders will pick their rights in full.

According to them, “The timing is right for the company which put it at this period   but  we are sure that Nigerian shareholders will not partake in full because of funding. Whatever is not taken up by Nigerian shareholders will be picked up by Cadbury UK.”

Sunny Nwosu, National coordinator of the Independent Shareholders Association of Nigeria (ISAN), said “We need to take our rights in order to avoid a situation whereby the foreign investors will increase their stakes. Although, this is a trying period for everybody, we will ensure that we take up our rights in full. We have observed that the company’s account is getting better and that means we would get rewarded in the long term.”

In the same vein, Timothy Adesiyan, President of the Nigerian Shareholders Solidarity Association (NSSA), implored the company’s registrars to dispatch the rights circular in good time so that those who cannot participate would be able to trade their rights at the Nigerian Stock Exchange (NSE).

“Shareholders who are unable to take up their rights could trade them on the NSE and enable those who have the money buy the shares,” he said.


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