Coronation Insurance Plc is set to delist from the capital market as its Board of Directors has agreed to pay off the company’s minority shareholders.
At a Court-Ordered Meeting held recently in Lagos, Mutiu Sunmonu, chairman of the company said the proposal is an offer from core shareholders to acquire the shares held by other shareholders, except those who opt to remain as shareholders of Coronation Insurance Plc, with each shareholder receiving 65 kobo as consideration for every share transferred.
Starting with an initial offer of 65 kobo, even though the company’s share is valued at 50k per unit, the shareholders at the meeting requested an upward review of the offer price. This request was granted by the company’s Board of Directors as a final offer of 78 kobo per share, which represented a 20 percent increase over the initial offer of 65 kobo was communicated and accepted by shareholders.
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By this development, Coronation Insurance Plc is expected to approach regulators, comprising of the Nigerian Stock Exchange (NGX), Securities and Exchange Commission (SEC), the National Insurance Commission (NAICOM), and the Court to affirm this decision and begin the process of delisting from the NGX to become a Limited company.
Addressing the over 600 shareholders who voted at the meeting, Sunmonu said, the Board of Directors took this decision in view of the anticipated recapitalization exercise in the insurance industry, noting that, the insurer will need to deploy significant capital, which is unlikely to be met by profit retention alone.
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According to him, “the ability to raise capital through the public equity markets was considered and not favoured given current market conditions. It is also unclear if all shareholders will be willing and able to invest additional capital in the business”.
He added that “few shareholders participated in the company’s rights issue in 2020, which was about 68 percent subscribed, with 96 percent of that coming from Coronation Capital (Mauritius) Limited and other related parties. As such, any new capital raise will result in significant dilution of equity stake of minority shareholders. It will also be prudent for the company to save all generated profits which suggests that no significant dividends will be paid in the short to medium term.”
