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Zenith, IBTC package N5.24 billion right
issue for Flour Mills
By
Esan Sunday
Senior Finance Correspondent,
Lagos
Flour
Mills of Nigeria has called on its existing shareholders to increase their
shares through a right issue, which opens on November 15, 2004 and ends on
December 22, 2004. The company is offering 436,800,00 ordinary shares of 50
kobo each to the shareholders at N12 per share on the basis of three new shares
for every five shares held.
The
offer, being packaged by Zenith Bank Plc and IBTC, ultimately will fetch the
company N5.24 billion.
According
to the company’s Chairman, Mr. George Stavros Coumantaros, the proceeds
would be used to repay medium term loan for additional mills as well as
reduction of its overdraft facilities. While urging the shareholders to pick up
their rights, Coumantaros said the rights present them an opportunity to
benefit from the company’s enhanced performance.
It
should be noted that the shares are being offered to the shareholders at a
discount of 28 per cent as the stock is being sold currently on the floor of
the Nigerian Stock Exchange (NSE) at N16.61. At the completion Board Meeting,
the company’s Managing Director, Chief Emmanuel Ukpabi, disclosed that
the proceeds of the issue would be applied to refurbish and modernise three of
the company's mills (A, B and C mills) and their tempering and cleaning
facilities, provide adequate infrastructure at the Abuja and Enugu depots, and
part fund the additional investment in the use of natural gas for power
generation the company plans to make in power generation over the next three
years.
The
company, he said, would achieve substantial savings by switching to natural
gas, a cheaper and cleaner source of fuel. He also disclosed that the proceeds
would be applied to repay medium term loans, which were incurred to finance the
acquisition of an additional 1,000 metric tons per day mill, repay other term
loans and fund the enhancement and refurbishment of the staff canteen and
complete other building projects at Apapa.
The
balance of the proceeds, according to him, would be used to improve and
strengthen the company's working capital by reducing the need for short-term
borrowings.
Speaking
at the end of the meeting, the Chief Executive Officer of Zenith Bank, Mr. Jim
Ovia, reiterated that he expected good shareholder response to the issue, as
the price of N12.00 was attractive. He urged investors to seize the opportunity
to increase their shareholding in Flour Mills as the company would consistently
reward their loyalty by maximising returns on their investments.
IBTC
Chief Executive Officer, Mr. Atedo Peterside, also commended the management of
Flour Mills for its excellent efforts at making the company one of the leading
manufacturing outfits in the country and for the commitment it has shown
towards the issue.
He also urged the company's shareholders to seize the
opportunity of the rights issue to confirm their faith in the company's
potential for future growth. Meanwhile, the rights circular for the issue,
which contains a Provisional Allotment Letter and the Application/Renunciation
Form, is being mailed directly to shareholders.
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