Nigeria: Union Bank Returns Proceeds Of Failed Rights Issue

VENTURES AFRICA – Union Bank, one of the oldest commercial banks in Nigeria, announced on Tuesday that it has refunded all shareholders that participated in its failed rights issue.

 

Union Bank’s the Head of Corporate Affairs; Francis Barde disclosed in statement that the payment of warrants in respect of the proceeds and accruable interests were concluded on May 30.

 

Rights issue warrants were dispatched through the bank’s issuing houses, the Chapel Hill and Union Capital Market Ltd., with 3 percent interest, Barde confirmed.

 

Nigeria’s Securities and Exchange Commission (SEC) had ordered the cancellation of the rights issue in accordance with its Rule 70 (60) (iii) and (iv) because the offering was subscribed by only 15.25 percent.

 

Union Bank of Nigeria (UBN) Plc had offered 1.41 billion ordinary shares of 50 kobo each at N6.81 per share in the ratio of five new ordinary shares for every nine ordinary shares held as at the September 30, 2011 to raise part of the recapitalisation funds as looked towards posting N65.5 billion ($406.5 million) pre-tax profit in the next three years, following the Rights Issue

 

Prior to the Rights Issue, forecasts for three years were made available to shareholders. According to the forecasts, which was endorsed by the board of the bank, the bank was expecting that profit before tax would be about N65.5 billion ($406.5 million) for the three-year period between 2012 and 2014.

 

In the failed offering, existing shareholders only picked about 15.25 per cent of the shares against the stipulated 30 per cent subscription rate.

 

The bank’s original proposal was for the new core investor, Union Global Partners Ltd, to own 60 percent holding, the Asset Management Corporation of Nigeria would hold 20 per cent, with minority shareholders holding the remaining 20 percent stake.

 

On the bank’s audited result, Barde said that the report for the financial year ended Dec. 31, 2011 would be released to the public very soon.

 

According to him, the bank was waiting for the approval of the Central Bank of Nigeria to release the result.

 

 

Union Bank is one of the oldest banks in operation in Nigeria. Established in 1917, the bank has an interconnected branch network across the 36 states of Nigeria, with subsidiaries in Cotonou, Benin Republic and London, UK. It also maintains a Representative Office in Johannesburg, South Africa.

 

 

In July 2009, Union Bank was rated the 14th largest bank in Africa, with an asset base estimated at $826 million, which made it the 9th largest bank in Nigeria by asset valuation.