Some shareholders of Unions Bank of Nigeria Plc have expressed willingness to  pick  up rights as a way of increasing their  stake in the bank.

Union Bank is offering about 1.41 billion ordinary shares of 50 kobo each at N6.81 per share in the ratio of five new ordinary shares for every nine ordinary shares held as at the September 30, 2011.

The application list for the rights issue opened on Wednesday December 14, 2011 and will remain open till January 20, 2012.

Rights opened after the bank got a  final approval  the Securities and Exchange Commission (SEC). Shareholders had earlier at the extra-ordinary general meeting in September overwhelmingly approved the scheme of arrangement for the recapitalisation of the bank, which included the rights issue and injection of new capital by new core investors.

And leaders of shareholders associations said they were fully prepared to excise their rights. For instance, President, Nigeria Shareholders Solidarity Association (NSSA), Mr. Timothy Adesiyan, said shareholders were expecting the rights issue and had prepared to pick their rights, noting that they voted for the scheme partly in consideration of the rights issue.

He said himself and other members of NSSA would pick their rights in furtherance of their commitments to see the re-emergence of a highly capitalised Union Bank.

According to him, the rights is part of the conditions of the recapitalisation. Shareholders  have been in the know on the size, allotment and price of the issue even before they voted for the scheme of arrangement that included the rights issue.

Speaking in the same vein, President, Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Dr. Faruk Umar, said the rights issue was in the interest of shareholders as it would be exclusively for pre-scheme shareholders and not investors that came in after the September recapitalisation.

He said he and other like-minded shareholders would be willing to pick their rights, noting that the rights issue was being undertaken “to help shareholders.”

President, United Shareholders’ Front, Mr. Gbenga Idowu, said he was determined to pick his rights irrespective of the downtrend in the secondary market.

According to him, shareholders recognise value offerings in the market  and would look beyond the immediate constraints. He noted that the capital market would gradually recover and shareholders who had locked in values during the downtrend would be in position to benefit from higher returns.

“I will pick my rights and advise others to pick theirs; the general feeling is that shareholders want to pick their rights. What’s happening in the banking recession is a passing phase, things will get better,” Idowu said.

A founding member of the NSSA, Alhaji  Gbadebo Olatokunbo, said he saw the rights issue as an opportunity  to increase his holdings in the bank.

“There is no way we won’t pick our rights.We stood by the bank when it was down and it brought back from the precipice, the rights issue is opportunity for us to benefit from the recapitalisation,” Olatokunbo said.

He said feelers so far pointed to possibility of an oversubscription, noting that shareholders who might not be opportune to pick their rights would have their renounced shares taking over by other shareholders who have indicated interests in securing additional allotments.
According to him, considering that the new core investors paid the same price,  then it is fair deal.

The immediate past Chairman, Association of Stockbroking Houses of Nigeria (ASHON), Alhaji Rasheed Yusuf, who noted that stockbrokers had huge shareholding interests in Union Bank, said the choice of a group of reputable international investors with requisite technical know-how and capital to drive the performance of the bank had reassured stockbrokers that their investments would soon witness notable improvement.

“Knowing who the core investors are, is very key, because we are not just looking at what we will get now but in two years and beyond. The core investors are institutions well-grounded in the financial industry, they will not just come with money but also bring know-how and experience,” Yusuf said.

Source: ThisDay/Goddy Egene