Recapitalization: UBA seeks shareholders’ approval to issue 10.8 billion shares.

Recapitalization: UBA seeks shareholders’ approval to issue 10.8 billion shares.

The Board of UBA Plc will seek shareholders’ approval to issue 10.8 billion new ordinary shares during the bank’s annual general meeting, as the group tries to raise its share capital from N17.099 billion to N22.5 billion.

According to a notice signed by Bill A. Odum, Group’s Company Secretary, the bank is seeking to raise the number of its issued shares from 34.199 billion to 45.999 billion ordinary shares valued at N0.50 each.

The move has become necessary as the bank tries to improve its capital base in line with regulatory requirements. Currently, UBA boasts a combined share capital and share premium of N115.8 billion, which is N384.2 billion off its required capital base of N500 billion.

The notice read,

“That the Issued Share Capital of the Company be and is hereby increased from N17,099,710,683 (seventeen billion, ninety-nine million, seven hundred and ten thousand, six hundred and eighty-three Naira only) divided into 34,199,421,366 (thirty-four billion and one hundred and ninety-nine million, four hundred and twenty-one thousand, three hundred and sixty-six) ordinary shares of N0.50 Kobo each to N22,500,000,000 (twenty-two billion five hundred million Naira) by the creation of 10,800,578,634 (ten billion eight hundred million five hundred and seventy-eight thousand six hundred and thirty-four) new ordinary shares of N0.50 Kobo each ranking pari-passu with the existing ordinary shares of the Company and that the Board be authorized to take the necessary steps, if deemed appropriate, to cancel any unallotted shares of the Company or to further increase the share capital of the Company to an amount sufficient to accommodate any transaction undertaken by the Company to raise additional equity capital.”
What you should know
As of April 15, UBA was trading at a share price of N25.00, marking a 2.35% decline year-to-date. This reflects the bearish sentiment pervading banking stocks since the announcement of the recapitalization exercise.

The pricing for the newly issued shares in the market remains undisclosed. However, in a speculative scenario where these shares trade within the range of N20 to N25 per share, it is projected that UBA stands to raise an estimated sum between N216 billion and N270 billion.

The bank will try to raise capital by other means apart from a rights issue. According to the notice, the bank is also seeking that the Board of Directors be granted the authority to gather more funds for the company through various means, including issuing different types of financial securities such as shares, bonds, or notes.

The notice also read,

“That the Board of Directors of the Company be and is hereby authorized to raise additional capital through the issuance of securities comprising ordinary shares, preference shares, convertible and/or non-convertible notes, bonds, or any other instruments, in the Nigerian and/or International Capital Markets, either as a standalone issue(s) or by the establishment of capital raising programmes, whether by way of Public Offerings, Private Placements, Rights Issues and/or other transaction modes, at prices, coupon or interest rates determined through book building or any other acceptable valuation method or combination of methods, in such tranches, series or proportions, within such maturity periods and at such dates and upon such terms and conditions as may be determined by the Board of Directors of the Company subject to obtaining the requisite approvals of the relevant regulatory authorities.”