First Aluminium Nigeria Plc and Newrest ASL Nigeria Plc have blamed low trading activities, illiquidity and poor performance of their shares at the Nigerian Stock Exchange (NSE) for their decisions to delist their shares from the Exchange.
The companies, in separate statements, said the benefits of continuing listing are not commensurate with the costs citing their historic pricing and trading trends.
Newrest ASL in February 2019 filed application to delist its entire 634 million ordinary shares of 50 kobo each from the Daily Official List of the Exchange. The board of Newrest ASL had approved the commencement of the voluntary delisting in December 2018 and presented the proposal for approval of shareholders at an extraordinary general meeting in January 2019. Shareholders approved the board’s recommendation to delist.
Newrest ASL explained it listed its shares in order to raise capital and provide liquidity to its shareholders but the current illiquidity at the stock market has rendered this primary objective unattainable.
The company noted that there was a significant fall in trading volumes from about 78.09 million shares in 2017 to 9.03 million shares in 2018.
According to the company, the attendant cost and time required to comply with listing requirements such as quarterly and annual fillings, annual certifications, filing fees, penalties or sanctions, corporate governance certifications and many meetings are not commensurate with the benefits accruable to the company.
Newrest Group, which, together with its affiliates, holds majority equity stake of 81.82 per cent in Newrest ASL is the promoter of the voluntary delisting and it is seeking to buy out minority shareholders who may not want to be part of an unlisted company.
Under the proposal, Newrest Group will pay N7.70 per share to every shareholder exchanging their Newrest ASL shares. Alternatively, shareholders may decide to stay in the unlisted company. The acceptance period of the exit consideration ended April 25, 2019.
Also, First Aluminium Nigeria also blamed inactivity on its shares and inability of the current listing to help in realizing the corporate objectives of the company.
In a statement on the voluntary delisting, the company stated that the purpose for listing was to raise capital as well as provide liquidity to its shareholders but the current illiquidity nature of the market has rendered this primary corporate objective unattainable for the company.
According to the company, over the last 12 months, there has been a significant fall in average daily trading volumes to 2,918 shares between July 2017 and June 2018 and further dip to 2,816 shares between July 2018 and December 2018.
“Neither the company nor any shareholder is benefiting from the continued listing on the NSE. Furthermore, rationalization of operational expenses to support the company’s business and to meet the needs of various stakeholders as the attendant cost required to comply with its listing requirements including filing fees, penalties or sanctions, are not commensurate with the benefits to the company,” First Aluminium stated.
ALUCON Holdings SA, the majority core investor that holds about 75.48 per cent equity stake in First Aluminium Nigeria, is offering to buy out willing minority shareholders. Minority shareholders hold about 24.52 per cent equity stake in the company. ALUCON Holdings is offering to pay 55 kobo per share. Alternatively, shareholders can trade their shares on the NSE. However, a shareholder that desires to remain a shareholder of an unlisted First Aluminium Nigeria Plc shall be free to do so.
According to the company, over the past seven years, there have been little or no trading activity on the shares held by the minority shareholders while the share price was stuck at 50 kobo for about six years. It has since dropped further below nominal value.
“Shareholders are not benefitting from the continued listing as they are not getting exit opportunities and their investments have been locked up, thereby finding it difficult of their shareholding. Neither the company nor its shareholders have benefitted as the company’s shares continue to trade at a significant discount to the intrinsic value,” First Aluminium stated.
The company noted that the voluntary delisting will offer exit opportunities to shareholders who do not wish to remain in an unlisted public company.
Following a resolution by the board of directors of the company on August 08, 2018, shareholders of First Aluminium Nigeria had at the annual general meeting on September 25, 2018 approved the voluntary delisting of the entire issued share capital of 2.11 billion ordinary shares of 50 kobo each. First Aluminium Nigeria was listed on the NSE in 1992.