SEC challenges self-delisting plans by Continental Reinsurance

The Securities and Exchange Commission (SEC), Nigeria’s apex capital market regulator has cancelled a court-ordered meeting that approved the acquisition of minority shares by the majority core investor in Continental Reinsurance (ConRe) Plc. The Commission ordered the company to reconvene another court-ordered meeting for consideration of the proposed acquisition.

The board of Continental Reinsurance had announced that it had received an offer from CRe African Investments Limited (CRe Investments), a major investor in the Nigerian company, to acquire all the outstanding and issued shares of Continental Reinsurance.

At the court-ordered meeting held on December 20, 2018, the company secretariat had filed that shareholders approved the takeover bid launched by CRe Investments, which will turn Continental Reinsurance into a wholly-owned subsidiary and lead to delisting of its shares on the Nigerian Stock Exchange (NSE).

Aligning with the protests over irregularities by some shareholders, SEC cancelled the December 20, 2018 court-ordered meeting and directed the company to reconvene another meeting.

A source in the know said the cancellation was related to the conduct of the meeting and not the subject of the acquisition noting that SEC had earlier granted the scheme for the transaction its preliminary approval of “No Objection”.

The NSE, which had fully suspended trading in the shares of Continental Reinsurance on Monday, December 31, 2018, yesterday lifted suspension on the shares citing the cancellation of the court-ordered meeting upon which the application for suspension of trading was based.

The NSE had placed full suspension on the shares of Continental Reinsurance at the instance of the stockbroker to the reinsurance company; Chapel Hill Denham Securities Limited, which had sought to proceed with the final phase of the acquisition process.

Full suspension of trading is usually necessary to determine the shareholders that will qualify to receive the scheme consideration following consideration and approval of the scheme of arrangement or similar framework for resolution of a transaction.

According to the Exchange, trading resumed on the shares of Continental Reinsurance with effect from Thursday, July 18, 2019.

The Exchange stated that the suspension was lifted to allow shareholders trade on their shares pending the reconvening of the meeting and announcement of a new effective date by the company.

The board of Continental Reinsurance had stated that it supported the acquisition because CRe Investments wanted to initiate a much-needed restructuring exercise for Continental Reinsurance, with a view to consolidating its operations and repositioning it for enhanced competitiveness in the global insurance market.

The acquisition was planned to be executed through a Scheme of Arrangement under Section 539 of the Companies & Allied Matters Act Cap C20 Laws of the Federation of Nigeria 2004 and other applicable rules and regulations.

CRe Investments had offered N2.04 per share for the 10,372,744,314 ordinary shares of 50 kobo each or one ordinary shares of $1 each in the capital of CRe Investments for every 176 ordinary share of 50 kobo each held in Continental Reinsurance.

However, at the December 20, 2018 meeting, the scheme consideration was revised upwards from N2.04 to N2.10 per share, with the new price representing 51.08 per cent premium on the share price of Continental Reinsurance as at the close of trading on October 5, 2018 which was the last business day prior to the date on which the proposal was received from CRe African Investments Limited.

Continental Reinsurance was incorporated in 1985 and started business as a private reinsurance company in Nigeria. In January 1987, it began to operate as a general reinsurer and then became a composite reinsurer in January 1990, offering both treaty and facultative life and non-life reinsurance, with a well-diversified business mix and customer base.

As part of its goal to become a recognized leading reinsurance company in Africa, it converted to a public limited liability company in 2000. After it recapitalized to the tune of N10 billion in 2007, it listed its shares on the NSE in May 2007.

With five client service centres in Nigeria, Cameroon, Cote d’Ivoire, Kenya and Tunisia with Nigeria as headquarters, it has grown a diversified portfolio across 43 countries.

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