September 11, 2019
by United Capital Research
Recently, UAC of Nigeria Plc (UACN) alongside its subsidiary, UAC Property Development Company Plc (UPDC), jointly announced plans to raise equity capital worth N15.96bn via a rights issue to recapitalise UPDC and subsequently unbundle UACN’s shareholding in UPDC. Additionally, the post-capitalised UPDC will unbundle its holding in the UPDC Real Estate Investment Trust (UPDC REIT) leading to the emergence of three standalone entities – UACN (ex-UPDC), a standalone UPDC and a standalone REIT company (UPDC REIT).
Currently, UACN holds a 64.2% stake in UPDC. Similarly, UPDC controls 61.77% of UPDC REIT. Following the completion of the rights issue, UPDC would unbundle its stake in UPDC REIT to UPDC shareholders (including UACN) in proportion to their post right issue holdings in UPDC. Also, UACN would thereafter unbundle its shareholding in UPDC to its shareholders on a pro-rata basis.
According to the transaction circular, the objectives of the unbundling exercise are that
1.) UPDC will no longer own any units in the REIT,
2.) UPDC REIT will cease to be an associate company of UPDC,
3.) UPDC shareholders will become direct unitholders in the UPDC REIT in addition to their shares in UPDC,
4.) UPDC will cease to be a subsidiary of UAC and
5.) UAC shareholders will become direct holders of shares in UPDC and units in the UPDC REIT.