UNILEVER NIGERIA TO RAISE N58.8BN THROUGH RIGHTS



UNILEVER NIGERIA TO RAISE N58.8BN THROUGH RIGHTS ISSUE

Are you a shareholder in Unilever Nigeria Plc?  Soon you will be asked to invest N420 more to buy 14 new shares for 27 of the current shares you hold.

According to the Acting Head, Listing Regulation department of the Nigerian stock exchange, Godstime Iwenekhai, this is because Unilever has formally applied to the exchange for approval to issue a rights that will involve about 1,961.7m new shares  of 50kobo each.

If approved, the rights offer will be at N30 per share meaning that Unilever will be raising about N58.8bn in new capital from shareholders existing in the books by yesterday, June 28, 2017.

It also means that given today's closing price of N40.85 per share at the market, the rights may be issued at a discount of about N10.85 per share if it is approved and if the current price stays until the real issue date.

The last deal  struck at the market today in Unilever, according to the daily official list was for 1000 units at N36.87 per share although it still closed at N40.85 per share.

It paid dividend of N0.01 per share on April 18 this year from 2016  accounts and so went ex-dividend on April 16, 2017.

In the last one year, its price ranged between a high of N50.01  and low of N27.81 per share and so, it is currently closer to the high. But it had price earnings ratio of 42.53 as at today June 29 2017 and that means that, in a nutshell, if you invest money at the current market price, it will take approximately 42.5 years for you to recoup your investment if returns continue as they did in 2016.

But of course, 2016 was a year of depression in Nigeria and may not be a good measure of expectations for the future especially for a consumer goods manufacturer like Unilever more favoured these days  as government and Nigerians still continue to learn lessons from the hard times and try their best to buy Nigerian.

One more factor to consider is that some shareholders may not have enough money to take up new shares due to them under the proposed rights offer but that may only lead to water down of their % holdings in the company. On the other hand, they could still make some gains by trading their rights in the electronic window opened for this recently at the stock market.

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