The full suspension placed on trading on shares of C&I Leasing have been lifted after the company informed the Nigerian Stock Exchange (NSE) that the shares consolidation exercise has been completed.
NSE had placed two weeks full suspension on C&I Leasing shares to enable the company to embark and complete the share capital reconstruction exercise from December 13 to 27, 2018, but the exercise dragged on into January 2019, with the company faulting the time-frame as the cause for delay.
The suspension restricted trading and price movement on the shares of the company while allowing Registrars to update the register of members after the reduction of the total number of its outstanding shares in the open market.
Purpose of capital reconstruction
This corporate action will afford C&I Leasing the opportunity to issue more shares in the future, while additional capital raised will be budgeted for the company’s expansion.
“THE PURPOSE OF THE RECONSTRUCTION IS TO ALLOW THE COMPANY TO HAVE ENOUGH UNISSUED SHARES TO ACCOMMODATE FUTURE PLANS TO RAISE CAPITAL THROUGH THE EQUITY CAPITAL MARKET. THE ADDITIONAL CAPITAL WILL BE USED TO FINANCE THE COMPANY’S EXPANSION PLAN, EXTINGUISH SOME LIABILITIES AND ENHANCE THE COMPANY’S CAPITAL MIX” .
Effect of the capital reconstruction on C&I Leasing’s shares
The share capital reconstruction will cut C&I Leasing’s paid-up share capital by 80 per cent, cancelling 1.506 billion ordinary shares, while four ordinary shares of 50 kobo each will be consolidated into one ordinary share of 50 kobo each. Also, C&I Leasing’s current outstanding share capital of 1.883 billion ordinary shares of 50 kobo each will be reduced by the reconstruction to 376.56 million ordinary shares of 50 kobo each.
Despite the official statement by C&I Leasing on the purpose of the consolidation of shares, analyst believes its more of a reverse split than a restructuring. A reverse split is a corporate action where a company reduces or decreases the number of its issued share capital.