By Peter OBIORA InvestAdvocate

Lagos (INVESTADVOCATE) – Union Bank of Nigeria Plc (UBN) Friday announced that Shareholders whose names appear on the Bank’s Register as at the time of the conclusion of its share reconstruction will enjoy a 40 percent (40%) discount if they pick up their Rights.

Tunde Yamah, Managing Director (MD) of Union Capital Markets Limited at an interactive session with Capital Market Correspondents and chaired by Philip Ikeazor, Executive Director, Corporate, International & Investment Banking & Treasury of Union Bank made this affirmation at Stallion Plaza, the Bank’s Corporate Head Office in Lagos Nigeria.

“There is always a tradable Rights price, because when you look at the Rights, you have five (5) new shares for every nine (9) that you own before. When you calculate it, you will find out that as a shareholder there is a benefit in it for you; because you are buying it at a discount. So if you want to sell it, certainly you want to sell some of the profit that is 40% as shareholders profit. You cannot sell it at N6.81 because the value of your portfolio is now lower that any person buying outside” Yamah said.

He affirmed that the tradable Rights price from the Bank’s calculation at present is about N2.70 Kobo, “which means when you sell it they will pay you the shareholder N2.70 Kobo per share. So any new person buying it will eventually pay N6.81 plus that N2.70. Effectively, that means the new person is buying it at N9.51 so you are sharing the profit with the outsider; because the other person can now make up to 20% profit; while the owner of the Right will also make 20% of the profit. But the Stock Exchange will state clearly what the tradable Rights price is” Yamah said.

According to him, shareholders who take up their Rights will definitely benefit from it and thus advised them to do so as soon as possible.

“You must make some profit from it, however, when they start trading at the Floor, the Stock Exchange will specifically state the tradable Rights price” he said.

He said the ongoing Rights Issue applies only to shareholders whose names are on the Bank’s Register as at the time of its share reconstruction.

“This Rights Issue applies only to those on the Register as at the time of reconstruction. So the Foreign Shareholders and AMCON are not participating in these Rights” he said.

In the Rights Circular made available to www.investadvocateng.com, Union Bank as earlier reported is doing a Rights Issue of 1,407,291,667 Ordinary Shares of 50 Kobo each on the basis of five (5) new Ordinary Shares for every nine (9) Ordinary Shares held as at October 21, 2011 at N6.81 Kobo per share.

In the same vein, Tunde Ayeni, MD of Union Registrars Limited affirmed that the reconstruction effectively transformed every 16 shares previously held into three (3) reconstructed shares. “If an investor has 10,000 units of shares, after reconstruction it will become 1, 875 shares. If you have a million, it becomes 187, 500 shares; all on the basis of the reconstructed shares that the Rights was applied at the ratio of five (5) new shares for every nine (9) reconstructed shares” Ayeni said.

“So it is an opportunity for existing shareholders to grow their equity stake” Ayeni said.

On his part, Ikeazor said the Rights Issue has started well with a lot of enthusiasm expressed and exhibited by the existing shareholders of Union Bank.

“If considered necessary, the Bank will request for additional days so that no existing shareholder is left behind in the exercise of his/her rights, especially during this holiday season” he said.

Meanwhile, the Bank last Friday announced through the Nigerian Stock Exchange (NSE) the completion of its share reconstruction in order to accommodate new shares.

Following this, the Nigeria’s Exchange said it has lifted the suspension placed on the Shares of Union Bank of Nigeria Plc (UBN) and has listed on its Daily Official List 2,533,125,000 Ordinary Shares of 50 Kobo par value at N11.15.

“Union Bank Nigeria Plc (UBN) has completed its Share Reconstruction Exercise. As a result of this, we have lifted off the Suspension placed on its Shares. We have today delisted UBN old shares and listed 2,533,125,000 Ordinary Shares of 50 K par value at N11.15 in the Official List of the Exchange after the Reconstruction” the NSE said.

The Bank on December 14 2011 opened a Rights Issue following the approval of the Securities and Exchange Commission (SEC).

Union Bank had on September 09 2011 at a parley with the Media said existing shareholders will own 21 percent (21%) stake at the end of its recapitalisation exercise compared to 6.8% formerly held; indicating an increase of 208.82 percent (208.82%) increase.

The Bank seeks to raise a little over N9.0 billion and Lead Issuing House to the Rights is Chapel Hill Advisory Partners Limited; while Joint Issuing House is Union Capital Markets Limited. Application list closes January 20 2012.