The Consolidated Hallmark Insurance (CHI) Plc, has received endorsement to proceed with establishing its proposed Holding Company (HoldCo) and all scheme of arrangement pursuant to Section 715 of the Companies and Allied Matters Act, 2020.
The path towards achieving the goal came when shareholders gave the approval at the company’s Court Ordered Meeting in Lagos.
In accordance with the Scheme of Arrangement, the 10,840,000,000 ordinary shares of 50k each in the issued and paid-up share capital of the company and held by the shareholders would be transferred to Consolidated Hallmark Holdings Plc.
The shares would be transferred in exchange for the allotment of 10.84 billion ordinary shares of 50k each in the share capital of the Holdco to the shareholders in proportion to their shareholding in the company to be credited as fully paid.
Obinna Ekezie, the company’s Chairman, while addressing the forum, said that the HoldCo structure would improve Consolidated Hallmark’s valuation by creating a structure where each subsidiary is able to operate a focused business.
Ekezie added that the HoldCo structure would streamline the Group’s structure to deliver operational and cost synergies to the business. According to him, the HoldCo structure will ensure that the subsidiaries operate under their separate regulatory requirements.
“Therefore, the risk that may arise from any of the businesses is isolated and does not necessarily impact all other businesses. This structure also creates a liability tax shield by placing operating companies and their assets in separate entities,” he said.
He also said that the HoldCo structure would enable Consolidated Hallmark pursue other value accretive opportunities that could arise in the near future.
“Consolidated Hallmark intends to take the necessary steps to position the Company for future opportunities across the insurance value chain. The restructuring is intended to mark a new chapter for the company and the Group, and enables the entities to become intentional about their next phase of growth and impact on the Nigerian Insurance industry,” Ekezie said.
Speaking on the effect of the restructuring on the shareholders, he said the board considers the restructure to be the most appropriate approach to create greater strategic flexibility and improve returns to shareholders.
Ekezie said that at the completion of the restructuring the shares of the HoldCo would be listed on the NGX, while the shares of CHI would be delisted.
Also, Sir Sunny Nwosu, the Founder, Independent Shareholders of Nigeria (ISAN), in his remarks commended the board and management of the company for being proactive.
Nwosu, who described the development as apt said that shareholders would not short change in the restructuring going by the scheme of arrangement. He, however, urged the board and management of the company to ensure adherence to the scheme timetable.