United Bank for Africa (UBA) plc has intention to issue out about 10.8 billion new ordinary share during the banks annual general meeting but the bank still awaits approval by the shareholders. This is to enable the group raise its share capital from N17.099 billion to N22.5 billion.
In respect to a notice signed by Bill A. the Group’s Company secretary Odum, 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 per share.
This issuance of new ordinary share has become necessary because the bank is trying to improve its capital base in line with regulatory requirements. For now, the combined share capital and share premium of UBA is N115.8 billion which is still N384.2 billon less the the base capital of N500 billion required.
Below is the notice
“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.”
On 15th of April, UBA was trading their share at 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.
UBA plc is yet to disclose the pricing for the newly issued shares in the market. Notwithstanding it is speculated that these shares will trade within the range of N20 to N25 per share, it is also projected that UBA stands to raise an estimated sum between N216 billion and N270 billion.
This is because 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.
