By Akintola Omigbodun

During the past week, Flour Mills of Nigeria Plc announced its intention to raise a sum of up to N40billion from its existing shareholders through a rights issue. No details have been given as to how the proceeds of the rights issue would be utilised.

However, the company has moved out of the Portland cement business and it is concentrating on and expanding its food business and one would expect the company to invest in areas that would bring about optimal use of its existing resources such as its power generating capacity, a 30MW gas plant and a 30MW diesel plant.

It is also encouraging that the company’s directors see a strong future in the business and the directors have not been influenced by thoughts about dilution of the shareholding structure given the low share prices on the floor of the Nigerian Stock Exchange, NSE. However, I hope the documentation for the rights issue would indicate the direction of the company’s profitability following on the additional investments in the company.

Ikeja Hotel Plc has been in the news for some time now. However, the level of its share price on the floor of the NSE has been very good for a company that has not paid any dividends in the past five years. There has been sustained interest in the shares of the company given that there have been some matters in contention between some of the shareholders and the directors leading to an extra-ordinary general meeting.

There are a number of suits before the courts between the contending parties and one hopes that the brand which Ikeja Hotel Plc represents in Ikeja would not be destroyed in the process. One of the suits that caught my attention is that some of the shareholders are complaining that they were not notified of the extra-ordinary general meeting and that the extra-ordinary general meeting should be invalidated.

The courts of course would decide these issues but these events have kept me wondering as to why companies do not show more interest in reaching their shareholders. Of some concern is a recent x-compliance report on the website of the NSE indicating that the Tourist Company of Nigeria Plc has applied to the NSE for the delisting of its shares. Ikeja Hotel Plc has some stake in the Tourist Company, the owners of the Federal Palace Hotel in Lagos.

The Tourist Company has not paid any dividends for five or more years and it would appear that the company would be profitable if it could raise the capital for the refurbishment of the Towers Wing of the Federal Palace Hotel.

The x-compliance report also gives a list of companies that have applied to the NSE for restructuring and they include Union Dicon, Capital Oil, Juli Pharmacy, Thomas Wyatt Nigeria Plc, Nigerian German Chemical Plc, Alumaco, Unic Insurance Plc, G. Cappa Plc, UTC, IPWA, Nigerian Wire and Cable Plc and Daar Communications Plc.

An official of the Securities and Exchange Commission, SEC, once made me to understand that SEC analyses the financial statements submitted by various companies and that SEC advises these companies on steps they could take to improve their performance. I wish SEC could make public its advice to companies as there are a number of companies whose share prices are at or near 50kobo per share, the very minimum on the floor of the NSE.

Of course some of these companies are on the restructuring list. However, restructuring can be a painful exercise. Union Homes Savings and Loans Plc recently concluded its restructuring and one old share has been valued at 16kobo with 40 old shares making up one new share with a quoted value of N6.40 on the first day of trading on the floor of the NSE.