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RIGHTS ISSUE: INVESTORS STILL SCRAMBLE FOR OANDO SHARES
Despite the ongoing Rights Issue, the
sgares of Oando Plc are still on demand in the secondary market, a development
stockbrokers attributed to 'a reflection of investors' strong confidence in the
company.'
"If a company is selling a Rights Issue at a discount,
and investors are still buying the shares in the secondary market at a higher
price, it means that the company has a very promising future, which the
investors are buying into with the expectation of reaping higher
dividend," said an investtor
Specifically, Oando shares are being traded on the Nigerian
Stock Exchange at N93.99 per share since it was placed on technical suspension.
The ongoing Rights Issue is sold at N70.00 per share to existing shareholders,
representing a discount of about 25.5 percent. It is a normal practice by the
Exchange to place shares on technical suspension when a company informs it of
plans to float any offer.
The positive demand of the shares of the company implies
that the existing shareholders are unwilling to sell their shares to willing
buyers. Ordinarily, this would have fueled a jump in the share price of Oando
as demand for the shares are greater than supply, but for the technical
suspension, the price still remains at N93.99 per share at the stock market.
At the end of transactions in the secondary market last
Tuesday, investors exchanged 1.746 million shares worth N164.136 million in
just 13 deals. It was gathered that most of the shareholders are not willing to
sell theirs at N93.99 per share since they believe that the price is
undervalued, given the rapid growth in virtually all the performance indicators
of the company in recent times.
According to stockbrokers "They are also confident with
the management of the company as gains from its massive investments have
started manifesting. The company paid a total dividend of N6.00 per share to
its shareholders in the last Annual General Meeting (AGM) held in Uyo, Akwa
Ibom State, having earlier received N3.00 per share as interim dividend. "They
are hoping that the company will surpass the current dividend next year"
Meanwhile, the Oando Rights Issue opened on Monday 25,
January 2010 and will close on Friday, 19 February 2010. The Rights Issue is
meant for existing shareholders of the company and is to be distributed in the
proportion of one for three, meaning one new ordinary share will be distributed
to a shareholder who has three ordinary shares of 50 Kobo each at a price of
N70 per share.
Speaking to newsmen recently, Group Chief Executive Officer,
Oando Plc, Mr. Wale Tinubu said, "the Rights Issue is very important for
the company as it will help refinance the acquisition of upstream asset,
provide additional capital to fund the operation of the upstream business and
also short and medium term investments in its gas and power business
segment".
According to him, "The net Rights Issue proceeds is
estimated at N20.437 billion after deducting the total cost of the Issue
estimated at N681, 312 million, (representing 3.23 per cent of the Issue), will
be applied as follows: Upstream Assets Refinancing N14.919 billion; Operational
Capital Development and Upstream Business Development N3.883 billion;
Technology N3.658 billion; People N225 million and Working capital N1.634
billion."
Oando had posted a turnover of N339 billion for the year
ended December 31, 2008, showing an increase of 83 percent from N186 billion in
2007. Gross profit rose by 59 percent from N7 billion to N11 billion, while net
profit rose by 52 percent from N5.48 billion to N8.34 billion. A final dividend
of Shareholders received a dividend of N5.4 billion or N6 per share.
Source:
Guardian Newspaper