The plan by Flour Mills of Nigeria Plc to raise N28.245 billion via a rights issue received the backing of investors Thursday as shareholders of the company expressed their support and willingness to actively participate in the offer.
Parties to the proposed rights issue gave their final approval in Lagos yesterday at the companyÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s Completion Board Meeting with the offer expected to open mid-November this year.
The company is seeking N28.245 billion from the market through the issuance of 455.566 million ordinary shares at N62 per share in the ratio of eight ordinary for every 33 ordinary shares.
The rights issue is designed to help it shore up its capital base and pursue its diversification programme.
Speaking at the meeting, Group Managing Director of Flour Mills, Mr. Emmanuel Ukpabi, said the proceeds from the rights issue would be used to pursue high growth expansionary business opportunities in the food and agro-allied sectors, reduce existing debt in its cement business and also provide working capital to support the companyÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s day-to-day operations.
He said: ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œProceeds of the issue will be utilised to fund the companyÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s financing activities, such as expansion of food business, reduction of medium term facility taken from some banks to enable it increase its holding in United Cement Company (UNICEM) , expansion of agro-allied business, investment in working capital for food and cement business and development of baking and food technology centre in Apapa.ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â
The shareholders lauded the management of the company for effectively positioning the company to tap from the enormous opportunities in the Nigerian economy, especially in the agriculture and power sectors.
President, Nigeria Shareholders Solidarity Association (NSSA), Mr. Timothy Adesiyan, said the rate at which the company was growing over the years was a pointer to every discerning investor that the company’s shares presented a good buy.
According to him, Flour Mills had been steady and had enjoyed continuous growth, especially with the introduction of innovation and cutting-edge technologies at all time.
He said the company’s diversification into the agriculture and power sectors will provide an enormous growth opportunity for the company and the country in general.
Adesiyan further stated that the eight ordinary shares for every 33 ordinary shares proposed by the company in the rights circular was another of Flour Mills’ way of putting smiles on the faces of shareholders adding that this became significant when viewed against recent developments in the banking sector, where shareholders were short-changed.
He expressed confidence on the success of the rights issue, saying that members of his association, other minority and majority shareholders have indicated their readiness to pick up their rights when the offer opens between November 14 and December 21, 2011.
Also speaking, Mr. Lekan Oresegun, a shareholder and member of the company’s audit committee, lauded the decision of the company to undertake the rights issue, because this, according to him, would provide the company easy access to cheap funds, especially with the current high interest rate situation in the banking sector.
He said the rights issue was an avenue for shareholders of the company to contribute their quota in moving the company forward.