By Festus Okoromadu
Leaders of key shareholders associations operating in the Nigerian capital market have thrown their weight behind the ongoing Rights Issue of Oando Plc. They have subsequently advised their members and other investors to take advantage of the Rights to increase their equity holding in the Group. They expressed optimism of reaping huge benefit from such an investment in the near future.
Oando is an integrated energy group and is shopping for N54.6 billion from existing shareholders through a Rights Issue of 4.548 billion ordinary shares at N12 per share. The offer which opened on December 28, 2012 is expected to close on February 8, 2013.
Sir Sunny Nwosu, National Coordinator, Independent Shareholders Association of Nigeria (ISAN), therefore called on shareholders to take up their rights.
“Shareholders should embrace the shares as a future stock. The company has made good investments in the energy sector and very soon the benefits will begin to manifest. The Rights Issue is therefore, an opportunity to buy more shares and wait for the returns that would come from those investments,” he said.
According to Nwosu, while the management of the company strives to make the right investments, government policies have not really helped in realising the benefits of some of those investments as quickly as expected.
“I believe that going forward, Oando’s performance will improve significantly. My plea to the Federal Government is that it should have the political will do take some decisions that would make investments in the oil sector profitable. The issue of subsidy removal, for instance, should be addressed once and for all,” he said.
Also speaking, the President of Nigerian Shareholders Solidarity Association (NSSA), Chief Timothy Adesiyan, noted that the price of the issue is very attractive, considering the assets and future prospects of the company.
“As you are aware, Oando Plc has huge assets in the energy sector. Its operations were only affected by the challenges in the environment. But I believe the bad times are over. The company has a very bright future and I have so much confidence in the business they are into. The price of N12 for the offer is an opportunity no shareholders should miss. The shareholders should take up their rights and increase their holdings,” Adesiyan said.
Chief Adesiyan noted that at N12, shareholders have an opportunity to average out their investments, and stand to benefit when the share appreciates.
According to the President, Association for the Advancement of the Rights of Nigerian Shareholders (AARNS), Dr. Faruk Umar, shareholders should take up their rights and wait for benefits the full deregulation of the downstream sector will bring to the company.
“Also, the market would have recovered more by the time the issue is concluded and this will translate into significant capital gains,” he said.
The National Chairman, Progressive Shareholders Association of Nigeria (PSAN), Mr. Boniface Okezie said the Rights Issue is a good deal.
“Forget what is happening currently in the Oil and Gas industry, given a level playing field, Oando will outperform many operators because the company is already a big player,” he said.
According to Oando, the net proceeds of the offer would be used to repay part of the loan used to acquire upstream assets and swamp drilling rigs, part-financing of acquisition of upstream and midstream assets by Oando upstream subsidiary, Oando Energy Resources and investment in working capital to support increased level of business.
Group Chief Executive of Oando Plc, Mr. Wale Tinubu said “We count on the consistent support of our shareholders to seize the opportunity to take up their rights and benefit from the higher margin value creation the upstream offers.”