The Chief Executive Officer of Union Bank Plc, Mr. Emeka Emuwa has said that the bank, which is currently on breach of regulatory prescribed 20 per cent share flotation may sustain the tempo until trends in the market improves.
The bank’s CEO disclosed this on Wednesday at the Nigerian Stock Exchange (NSE) during the bank’s presentation of ‘Facts behind the Offer’ of its ongoing N50 billion Rights Issue.
He said that the state of the market has made it impossible for shareholders not to trade their shares in the market.
According to him, the prevailing low pricing of equities has not been attractive enough for shareholders to trade their shares and boost flotation of the bank’s shares in the market.
Responding to question on why the bank has failed to comply with the NSE’s regulation on 20 per cent share float for main board listed companies, the union bank’s chief said that though the NSE granted the bank a waiver, but holders of the bank’s shares have not deemed it fit to trade their shares in order to boost share flotation.
He said, “When the market is sufficiently attractive, people will trade their shares if the pricing is right.”
He added that the stand point of the shareholders of the bank may have been responsible for the scarcity of the bank shares in the market; hence, people complained that the prevailing rights offer has been reported to be relatively unavailable in the market.
He said that the bank is positioned to pay dividend, but its negative retained earnings’ financial standing did not empower for dividend payment, adding that until this is sorted out, dividend payment would not be affected.
He, however, promised that the bank is currently working towards clearing the negative retained in order to commence dividend payment to shareholders.
Emuwa further disclosed that 80 per cent of proceeds from the ongoing right issue will be used for working capital.
He said that 12 per cent of the proceeds would be invested in technology, innovation and digitalization. While 8 percent is for customer touch points.
On the working capital, he said the bank would focus on six priority areas which includes, agriculture, manufacturing, solid minerals. Other areas are services like health, education, construction and real estate, oil and gas.
Responding to questions on what percentage will be deployed into manufacturing and agriculture, he said it depends on the opportunities that are available before the bank in the economy.
Details of the offer shows that the issued share size is N49.7 billion, number of shares is 12.1bn ordinary shares of 50 kobo each at N4.10 per share on the basis of 5 new ordinary shares for every 7 ordinary shares held as at August 21, 2017.
The offer opens on September 20, 2017 and closes October 30, 2017. The rights offer opened on 20th September and will end on October 30th 2017.
Earlier in his address, the CEO, NSE, represented by Mr. Ade Bajomo, Executive Director, market operations and Technology lauded the bank on its 100 years anniversary and contributions to the development of the market.