By Dipo Olowookere
A subsidiary of UAC of Nigeria Plc, UACN Property Development Company (UPDC) Plc, has been given the approval to go ahead with its plan to list N4.36 billion bond on the Nigerian Stock Exchange (NSE).
This exercise is from its N20 billion Bond Issuance Programme.
The N4.36 billion Series 1 Senior Guaranteed Fixed Rate Bond Due 2023 is by way of introduction and would give bondholders the opportunity to trade on their investments and allow new investors to participate in the issue.
UPDC has been leveraging on debts to fund its projects, after a slowdown in real estate market and stock market recession combined to shrink access to long-term capital.
Recall that an attempt by the company to raise equity funds last year was only partially successful as it was only able to secure half of the funds it sought under the capital raising.
Shareholders appeared to have shunned the shares that were provisionally allotted to them under the rights issue.
During the exercise, UPDC launched a rights issue of 1.719 billion ordinary shares of 50 kobo each to existing shareholders at N3 per share in a bid to raise N5.16 billion.
The shares were provisionally allotted on the basis of one new share for every one share held as at close of business on January 19, 2017.
However, the rights issue, which had opened on April 18, 2017 and closed on May 26, 2017, only recorded subscription for 879.65 million ordinary shares valued at N2.64 billion.
UPDC paid a total of N2.83 billion as interest expense during the year ended December 31, 2016, which contributed significantly to the company’s net loss of N1.55 billion during the period.
The firm had planned to use N3 billion from the N5.2 billion rights issue to repay debts.
