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 higher by 1.41 per cent on Friday, May 15, supported by four securities on the platform.
During the session, FrieslandCampina Wamco Plc added N14.24 to its share price to sell for N159.00 per unit, in contrast to the previous day’s N144.76 per unit.
Further, Central Securities and Clearing System (CSCS) Plc appreciated by N1.34 to N72.34 per share from N71.00 per share, Geo-Fluids Plc improved its price by 4 Kobo to N2.94 per unit from N2.90 per unit, and Industrial and General Insurance (IGI) Plc gained 1 Kobo to trade at 61 Kobo per share compared with Thursday’s closing price of 60 Kobo per share.
As a result, the NASD Unlisted Security Index (NSI) rose by 58.20 points to 4,188.41 points from 4,130.21 points, and the market capitalisation soared by N34.82 billion to N2.506 trillion from N2.471 trillion on Thursday.
During the session, the volume of trades went up by 180.8 per cent to 1.2 million units from 417,349 units, and the value of transactions increased by 29.8 per cent to N29.8 million from N23.2 million, while the number of deals fell by 22.6 per cent to 24 deals from 31 deals.
Great Nigeria Insurance (GNI) Plc ended the day as the most traded stock by value on a year-to-date basis with 3.4 billion units sold for N8.4 billion, followed by CSCS Plc with 60.8 million units exchanged for N4.1 billion, and Okitipupa Plc with 27.9 million units valued at N1.9 billion.
GNI Plc also closed the session as the most traded stock by volume on a year-to-date basis with 3.4 billion units worth N8.4 billion, followed by Resourcery Plc with 1.1 billion units transacted for N415.7 million, and Infrastructure Guarantee Credit Plc with 400 million units traded for N1.2 billion.
By Dipo Olowookere
The bears overpowered the Nigerian Exchange (NGX) Limited on Friday, sinking it further by 0.76 per cent when the closing gong was struck by 4 pm.
The nation’s flagship equity market was under selling pressure during the session, as investors booked profits after the shares witnessed price appreciation in the past trading sessions.
The energy sector was the most impacted, as it shed 4.43 per cent. The consumer goods index declined by 0.90 per cent, the banking counter decreased by 0.15 per cent, and the industrial goods sector lost 0.08 per cent, while the insurance counter gained 2.42 per cent, which was not enough to salvage the situation.
Consequently, the All-Share Index (ASI) contracted by 1,912.19 points to 250,330.92 points from 252,243.11 points, and the market capitalisation moderated by 1.225 trillion to N160.444 trillion from N161.669 trillion.
Zichis was the worst-performing stock for the session after it gave up 9.97 per cent to close at N29.43, FTN Cocoa slipped by 9.95 per cent to N8.96, The Initiates slumped by 9.90 per cent to N32.30, LivingTrust Mortgage Bank tumbled by 9.88 per cent to N3.83, and International Energy Insurance dropped 9.71 per cent to trade at N2.79.
The best-performing stock was ABC Transport, which grew by 10.00 per cent to N6.27. May and Baker also appreciated by 10.00 per cent to N47.30, SCOA Nigeria surged by 9.98 per cent to N33.05, Trans-Nationwide Express expanded by 9.97 per cent to N7.06, and DAAR Communications jumped 9.76 per cent to N2.25.
Yesterday, investors traded 1.1 billion shares worth N44.3 billion in 65,744 deals compared with the 1.0 billion shares valued at N41.6 billion transacted in 74,822 deals a day earlier. This indicated a dip in the number of deals by 12.13 per cent, and a rise in the trading volume and value by 10.00 per cent and 6.49 per cent, respectively.
Chams was the busiest equity for the day, with 328.5 million units sold for N1.1 billion. UBA traded 61.6 million units worth N2.7 billion, First Holdco transacted 58.7 million units valued at N4.2 billion, Secure Electronic Technology exchanged 51.9 million units worth N45.0 million, and Access Holdings traded 51.8 million units valued at N1.3 billion.
By Adedapo Adesanya
The last trading session of the week at the Nigerian Autonomous Foreign Exchange Market (NAFEX) ended on a negative note for the Naira on Friday, May 15, as it lost N15 Kobo or 0.1 per cent against the Dollar to trade at N1,371.04/$1 compared with the previous day’s N1,370.89/$1.
However, it further appreciated against the Pound Sterling in the same market segment yesterday by N20.77 to close at N1,830.61/£1 versus Thursday’s value of N1,851.38/£1, and gained N7.91 against the Euro to settle at N1,595.07/€1 versus N1,602.98/€1.
At the GTBank FX desk, the Naira lost N2 against the US Dollar during the session to sell at N1,383/$1 compared with the preceding session’s N1,381/$1, and at the black market, it remained unchanged at N1,385/$1.
The Naira is forecast to be broadly stable, supported by Dollar sales by the Central Bank of Nigeria (CBN) amid steady, higher oil receipts, with the market settling into a balance.
Policy direction is also expected to give the market some boost as the CBN said the new edition of the FX market guidelines will deepen liquidity, improve transparency and strengthen confidence in the country’s foreign exchange market.
According to the Governor of the CBN, Mr Yemi Cardoso, the update is due to changing global economic realities, domestic reforms and the need for a more coherent and forward-looking regulatory framework. According to him, the last edition of the FX manual was issued in 2018, making the latest review both timely and necessary.
Meanwhile, the cryptocurrency market plunged into the red zone as rising bond yields hit risk assets across markets, while traders are increasingly betting the Federal Reserve may need to raise rates again. Rising energy prices and resurging inflation could force central banks back into tightening mode.
Cardano (ADA) shrank by 4.4 per cent to $0.2557, Dogecoin (DOGE) slid by 3.7 per cent to $0.1104, Ripple (XRP) depreciated by 3.5 per cent to $1.41, Solana (SOL) crashed by 3.5 per cent to $87.81, and Binance Coin (BNB) slumped by 3.4 per cent to $659.64.
Further, Bitcoin (BTC) declined by 2.6 per cent to $78,547.49, Ethereum (ETH) lost 2.1 per cent to quote at $2,209.19, and TRON (TRX) tumbled by 0.7 per cent to $0.3509, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
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