By Peter OBIORA investadvocate

Dec 16 2010 05.12 GMT

Lagos (INVESTADVOCATE)-The proposed N43.00 compensation for minority shareholders following the plans by Nigerian Bottling Company (NBC) to delist from the Nigerian Stock Exchange (NBC) is not enough.

Sir Sunny Nwosu, President of the Independent Shareholders Association of Nigeria (ISAN) made this affirmation to investadvocate recently in Lagos Nigeria.

NBC in a notice Tuesday December 14 2010 informed the Stock Exchange of its plans to emerge a wholly owned subsidiary of its majority shareholder, Coca-Cola Hellenic Bottling Company of South Africa through a proposed scheme of arrangement.

Under the proposed Scheme, the Company had affirmed that a cash payment of N43.00 per NBC share is considered to be paid to minority shareholders.

 

NBC had affirmed that the proposed price would provide all minority shareholders with a premium of 37.4 percent (37.4%) to the 30-day average closing price and 43.2% to the closing price of NBC shares on the NSE on December 13 2010 which was N30.03 per NBC share.

Sir Nwosu said that he was surprised to hear about the planned delisting of NBC from the Nation’s Stock Exchange, “just the other day, I was with the Chairman of the Company and he never revealed this plan to me” he said.

The Shareholder Leader said that they are unhappy with the recent development and that N43.00 per NBC share as consideration to paid minority shareholders was not enough.

In the same vein, on March 24 2009, there was chaos as Construction Company, Cappa & D’Alberto Plc sought to pass a resolution to delist the company from the NSE at an Extraordinary General Meeting (EGM) held at the Muson Centre in Lagos Nigeria

 

One of the fundamental reasons the company gave was that charges been paid to the Stock Exchange is on a higher side; therefore cannot cope up with it.

 

Shareholders of the company were dissatisfied with the decision to delist the construction company from the Stock Exchange.

 

Pa Shotunde Shopeju, a Shareholder in his reaction, queried the rational behind the delisting of the company from the NSE.

 

“For heavens sake, you want to delist, companies with lower financial base are still with the Stock Exchange, and would the Board explain to us in totality the reason Cappa & D’Alberto is complaining that the amount being paid to the Stock Exchange as fees is high, this is not tenable here ” Pa Shopeju said.

 

Analysts from Proshare are of the view that these are early days but the market should be worried, seriously.

 

According to them, this move would naturally translate into a reduction of market capitalisation, but the more important one is the reduction of the diversity in listed securities, which would impact adversely on liquidity.

 

They also affirmed that the immediate effect is the blow on the image of the NSE as an avenue for raising capital and trading in the securities of listed Companies.

 

“Obviously, if the owners of NBC Plc believed in the former they would not contemplate delisting; same with the latter. The NSE and Securities and Exchange Commission (SEC) should be worried that our Market is perceived as having failed in both important criteria of successful Markets” they said.

 

The Proshare Analysts argued that the nature of the business of NBC is such that they may not be too dependent on the public Capital Market for their funding. But the Company also enjoyed public relations capital as a listed entity, which should justify its remaining on the bourse when capital raising opportunity is not a major attraction.