First Aluminium Nigeria Plc says “the current illiquidity nature of the capital market” has rendered the primary corporate objective of its listing to raise capital and provide liquidity unattainable.
The company, in an explanatory note to shareholders, said it was seeking a voluntary delisting from the main board of the Nigerian Stock Exchange as there had been little or no trading activity on the shares held by the minority shareholders over the last seven years.
First Aluminium, which is one of the first Nigerian listed companies, has seen its share price stuck at 50 kobo for about six years between June 2011 and June 2017, and thereafter experienced further diminution both in share price and trading volumes.
The company’s daily average volume ranged between 2,815 to roughly 2,918 units during the period July 2017 to December 2018.
It said there was a significant fall in its average daily trading volumes to 2,918 units between July 2017 and June 2018 and a further decline to 2,816 units between July 2018 and December 2018.
The company said neither it nor any shareholder was benefitting from the continued listing on the NSE.
It said the rationalisation of operational expenses to support the 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) were not commensurate with the benefits to the company.
The statement read in part, “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 to dispose 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.
“The increasing competitive environment and the struggle to defend market share have resulted in market pressure to reduce price and this may significantly impact operating margin.
“The majority shareholders (with over 75 per cent shareholding) are the promoters of the transaction and the majority shareholders wish to offer other shareholders (the minority shareholders) the opportunity to either remain shareholders of the unlisted company or accept a consideration for their shares, which the majority shareholders are willing to purchase.”
According to First Aluminium, in line with NSE regulatory requirements for a voluntary delisting, an exit opportunity had been provided for shareholders that do not wish to be part of the delisted company.
It added that at the meeting of the board of directors of the company, which held on August 8, 2018, the board approved and resolved to recommend to the shareholders of the company the delisting of all the 2,110,359,242 units ordinary issued share capital of the company from the daily official list and from trading on the main board of the Exchange.
It said the delisting would afford the company to carry out an imminent corporate restructuring exercise to take advantage of emerging opportunities.
The statement said, “The company may consider re-listing in the future if the market conditions are favourable. The voluntary delisting will not occasion loss of business opportunities as there are similar unlisted aluminium companies that are commanding significant share of the aluminium market.
“Also, minority shareholders will not lose their shares because of the voluntary delisting and such shareholders may retain their membership in the unlisted company. However, through the voluntary delisting process, the minority shareholders who do not wish to be members of an unlisted company will have an opportunity to exit the company, in accordance with the rules of the NSE.”
It stated that the shareholders approved the proposal for the voluntary delisting via a poll vote at its annual general meeting on September 25, 2018.
