Economy
$60m Buyout: Shareholders Want Forensic Audit of 7up
By Dipo Olowookere
Both the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) have been urged to urgently to conduct a forensic audit of Nigeria’s 7Up Bottling Company.
This plea was made by Nigerian shareholders in the firm and it followed the planned buyout by Affelka, its parent company of 7Up.
This development is also coming at a time one of the leading indigenous oil firm in Nigeria, Oando Plc is facing a similar crisis, though the firm is preventing the regulator from conducting a forensic audit of its affair.
This issue allegedly led to the suspension of the regulatory chief, Mr Mounir Gwarzo, by the Minister of Finance, Mrs Kemi Adeosun.
The shareholders want the capital market regulators to unravel circumstances surrounding the deal, which they believe is not totally clean.
Speaking with Daily Sun on telephone, the shareholders argued that they were unconvinced that the recent takeover notification of the company was not fraudulent scheme as there was no reason to suggest the firm was doing badly in its sector.
Recall that Affelka, majority shareholder of Seven-Up Bottling Company, had last week offered to pay $60 million (N19.33 billion) to buy out minority shareholders in Nigerian operation. According to the proposal, the buyout is aimed at restructuring the struggling company.
Affelka is the privately held investment firm owned by Lebanese El-Khalil family and it is offering to pay N112.70 per share for the minority stake of 171.5 million shares. This is an 18 percent premium to last Thursday’s share price of N95.50k.
“As of now, we have received an offer from the majority shareholder of the company. It’s a financial restructuring,” said Sunil Sawhney, Vice Chairman of 7Up Bottling Company.
He said the company has been making losses for some time and that the deal was aimed at restructuring the bottler, which distributes PepsiCo’s 7Up, Pepsi and Mirinda-branded drinks.
But minority shareholders in Nigeria rejected Sawhney’s explanation, pointing out that they seriously smelled a rat, and argued that the notification was out to short-change local investors.
According to Mr Gbadebo Olatokunbo, a shareholder activist, the 57 years old company is making good sales and profit with very good price at the NSE with the good result and return on investment in 2014.
“But suddenly, by the first half of 2015, something known only to its few foreign team within the company happened and the company started reporting losses.
“The drift continued and the same powers behind the scenes are now ready to buyout local investors at their price,” Mr Olatokunbo wondered.
He asked, “Why the renewed interest of the majority shareholders in a suddenly sick company? Why are they now interested in the takeover when the company wasn’t growing? How are we sure they weren’t the brains behind the unexpected bad results?”
Mr Olatokunbo stated that, “We are of very strong view that the proposed injection of $60 million is part of our profit on investments in 7Up, which was denied us and now about to be presented as a bailout-fund for a very solid 7Up Company, which we view with serious suspicion. It is a slap on our collective business senses and we hereby ask for a forensic audit of our company, 7Up, from 2014.”
In his own reaction, President of Nigeria Shareholders Solidarity Association (NSSA), Mr Timothy Adesiyan, said the news of the buyout offer was very disheartening.
“We thank God for the life of the former President, Olusegun Obasanjo, who made it possible for Nigerians to be part owners of these multinationals because it was during his tenure that a law was made, which made it possible for Nigerian shareholders to be part owners of these companies.
“But what is happening now is very disheartening because the gimmick is to shut out the local investors.
“The Securities and Exchange Commission (SEC) and Nigerian Stock Exchange (NSE) are not helping matters because most of the people there now don’t know what it took the former president to make Nigerians part owners of these multinationals,” he lamented.
He appealed to the Federal Government to look into the matter to stop foreigners from short-changing local investors because they are making money here.
For his part, Mr Boniface Okezie, National Coordinator, Progressive Shareholders Association of Nigeria (PSAN), blamed SEC and NSE for this issue.
According to him, “we saw it coming. Since SEC and NSE approved the delisting of NBC, we knew that others will follow suit. What are they restructuring?”
He explained that all boils down to short-changing local shareholders, adding that they are just after the buyout to delist from NSE and then, escape from corporate governance code because they are no longer listed.
Mr Okezie, however, urged the capital market regulators to subject 7Up to rigorous test to confirm some of its claims and also not to renege on its regulatory role of protecting minority shareholders.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed flat on Thursday, December 12 after it ended the trading session with no single price gainer or loser.
As a result, the market capitalisation remained unchanged at N1.055 trillion as the NASD Unlisted Security Index (NSI) followed the same route, remaining at 3,012.50 points like the previous trading session.
However, the activity chart witnessed changes as the volume of securities traded at the bourse went down by 92.5 per cent to 447,905 units from the 5.9 million units transacted a day earlier.
In the same vein, the value of securities bought and sold by investors declined by 86.6 per cent to N3.02 million from the N22.5 million recorded in the preceding trading day.
But the number of deals carried out during the session remained unchanged at 21 deals, according to data obtained by Business Post.
When trading activities ended for the day, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, Okitipupa Plc came next with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc was in third place with 297.5 million units worth N5.3 million.
Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units sold for N5.3 billion.
By Adedapo Adesanya
The Naira appreciated against the United States Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N14.79 or 0.9 per cent to trade at N1,534.50/$1 compared with the preceding day’s N1,549.29/$1 on Thursday, December 12.
The strengthening of the domestic currency during the trading session was influenced by the introduction of the Electronic Foreign Exchange Matching System (EFEMS) by the Central Bank of Nigeria (CBN).
The implementation of the forex system comes with diverse implications for all segments of the financial markets that deal with FX, including the rebound in the value of the Naira across markets.
The system instantly reflects data on all FX transactions conducted in the interbank market and approved by the CBN; publication of real-time prices and buy-sell orders data from this system has lent support to the Naira at the official market.
Equally, the local currency improved its value against the British Pound Sterling by N3.91 to wrap the session at N1,954.77/£1 compared with the previous day’s N1,958.65/£1 and against the Euro, the Nigerian currency gained N2.25 to sell for N1,610.41/€1 versus N1,612.66/€1.
However, in the black market, the Naira crashed further against the US Dollar on Thursday by N10 to quote at N1,680/$1 compared with Wednesday’s closing rate of N1,670/$1.
Meanwhile, the cryptocurrency market majorly corrected after earlier gains as US President-elect Donald Trump reiterated his ambition to embrace crypto assets, but a bond market rout dragged risk assets lower.
Mr Trump said, “We’re going to do something great with crypto” while ringing the opening bell at the New York Stock Exchange, reiterating his ambition to embrace digital assets in the world’s largest economy and create a strategic bitcoin reserve.
Alongside, the European Central Bank trimmed its benchmark interest rates by 25 basis points and in its dovish policy statement hinted that more rate cuts were likely to happen.
The biggest loss was made by Cardano (ADA), which fell by 4.9 per cent to trade at $1.10, followed by Ripple (XRP), which slid by 4.1 per cent to $2.33 and Dogecoin (DOGE) recorded a value depreciation of 2.9 per cent to sell at $0.4064.
Further, Solana (SOL) slumped by 1.8 per cent to $225.89, Binance Coin (BNB) slipped by 1.3 per cent to $746.92, Bitcoin (BTC) declined by 0.6 per cent to $99,998.18, Ethereum (ETH) crumbled by 0.5 per cent to $3,909.43, and Litecoin (LTC) dipped by 0.3 per cent to $121.52, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
The oil market slumped on Thursday, pressured by an expected increase in supply, supported by rising expectations of a Federal Reserve interest rate cut.
The International Energy Agency (EIA) made a slight upward revision to its demand outlook for next year but still expected the oil market to be comfortably supplied, with Brent crude futures losing 11 cents or 0.15 per cent to trade at $73.41 per barrel and the US West Texas Intermediate (WTI) crude futures declining by 27 cents or 0.38 per cent to finish at $70.02 per barrel.
The IEA in its monthly oil market report increased its 2025 global oil demand growth forecast to 1.1 million barrels per day from 990,000 barrels per day last month, largely in Asian countries due to the impact of China’s recent stimulus measures.
At the same time, the IEA expects nations not in the Organisation of the Petroleum Exporting Countries and Allies (OPEC+) group to boost supply by about 1.5 million barrels per day next year, driven by the US, Canada, Guyana, Brazil and Argentina – more than the rate of demand growth.
On Wednesday, OPEC cut its demand growth forecast for 2024 for the fifth straight month.
The IEA said that, even excluding the return to higher output quotas, its current outlook is to a 950,000 barrels per day supply overhang next year, which is almost 1 per cent of the world’s supply.
The Paris-based agency said this would rise to 1.4 million barrels per day if OPEC+ goes ahead with its plan to start unwinding cuts from the end of next March.
Next year’s surplus could make it harder for OPEC+ to bring back production. The hike was earlier due to start in October 2024, but OPEC+ has delayed it amid falling prices.
Meanwhile, inflation rose slightly in November increasing the possibility of a US Federal Reserve rates cut again as the data fed optimism about economic growth and energy demand.
Support also came as crude imports in China grew annually for the first time in seven months in November, up more than 14 per cent from a year earlier.
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