FAQ - Rights Issue

Frequently Asked Questions on the Rights Issue


Q. Why is FMN undertaking a Rights Issue?

A. The Rights Issue is being undertaken primarily to pay down some of the Company’s outstanding
short-term debt in order to reduce its finance costs which have increased significantly in recent
times, and reshape the Company’s balance sheet. Some of the proceeds will also be used for
working capital support.

Q. How will the Rights Issue affect the financial performance of FMN?
A. The Rights Issue is expected to help optimise FMN’s capital structure as well as improve the
operational and financial flexibility of the Company, as it will reduce the burden of rising financing
cost.

Q. Will FMN need to raise more cash after this Rights Issue?
A. FMN has carried out an assessment on its funding requirements for the medium term. The
proposed Rights Issue size is expected to assist in optimising the Company’s capital structure by
reducing short-term borrowings as well as improving the operational and financial flexibility of the
Company. 

The Rights Issue

Q. What is the timetable for the Rights Issue?
A. The Issue opens on Monday, 15 January 2018 for a period of 28 working days and will close on
Wednesday, 21 February 2018. We expect to conclude the Rights Issue in Q1 2018.

Q. Where can we get the full details of the Rights Issue?
A. All shareholders will have personalised Rights Circulars posted to them upon receipt of regulatory
approvals ahead of Issue launch. You may also contact the Registrars, Atlas Registrars Limited
or any of the Issuing Houses, Stanbic IBTC Capital Limited, FBNQuest Merchant Bank Limited
and Zenith Capital Limited for further information about the Rights Issue.

Q. What will the proceeds be used for?
A. The proceeds will be used to repay some of the Company’s overdraft and short-term loan
facilities and provide working capital support. The circular to shareholders includes more details
of how the proceeds will be utilised.

Q. How can I subscribe to the Rights Issue?
A. All shareholders will have personalised Rights Circulars posted to them ahead of Issue
launch. The Rights Circular will include a participation form which incorporates details such as the
number of rights each shareholder is entitled to and the amount payable. The application form will
also contain specific details on how shareholders can either take up their rights, take up
additional rights or trade such rights.

Q. How long will the Issue be open for?
A. The Issue is expected to be open for the maximum allowable period – 28 working days.

Q. I may have changed addresses prior to Issue launch, how will I obtain my rights circular?
A. Following launch, kindly contact the Company’s registrar – Atlas Registrars Limited or any of the
Issuing Houses – Stanbic IBTC Capital Limited, FBNQuest Merchant Bank Limited and Zenith
Capital Limited to obtain a duplicate rights circular.

Q. How can I trade my rights?
A. Kindly contact your stockbroker who will advise you on the necessary documentation and steps to
trade the rights. The rights are tradable on the floor of The Nigerian Stock Exchange throughout
the acceptance period.

Q. How long will it take to get my shares after the Rights Issue?
A. Following receipt of allotment clearance from the Securities and Exchange Commission (“SEC”),
shares will be deposited electronically into CSCS accounts within 15 working days of receipt of
allotment clearance.

Q. How will I know if my subscription in the Rights Issue is successful?
A. Shareholders who participate, based on the terms of the Rights Issue, are guaranteed their
provisional allocation while those who apply for additional rights will be allotted any additional
rights not taken up by other shareholders on a pro rata basis.

Q. Will the Rights Issue be underwritten?
A. Our Advisers have advised that underwriting comes at an added cost to the Company and most
Rights Issues in Nigeria are typically not underwritten. The Board believes that a good
percentage of shareholders will participate in the Rights Issue.

Q. What will the Board do in respect of any rights which are not taken up
A. All shareholders are entitled to apply for additional shares, over and above their provisional
allocation. In the event that there are unsubscribed shares in the Rights Issue, the unsubscribed
shares will be allotted to shareholders who applied for additional rights. Thereafter, any remaining
unsubscribed rights will revert to the unissued authorized share capital of the Company.

 

Rights Issue Pricing

Q. What is the qualification date for the Rights Issue?
A. 08 December 2017

Q. What are the terms of the Rights Issue?
A. The terms of the Rights Issue are as follows:
Rights Ratio: 9 new shares for every 16 shares held by the shareholder as at the

Qualification Date i.e. 08 December 2017

Rights Issue Price: N27.00
No. of shares: 1,476,142,418

Q. How was the Rights Issue price determined?
A. The proposed Rights Issue price was determined by the Board following the recommendation of
the Company’s financial advisers, which considered various qualitative and quantitative factors,
including the Company’s market price, current market conditions, discounts of comparable rights
issues and an assessment of the likelihood of investor participation.

Q. What if the market price of the Company’s shares falls below the Rights Issue price?
A. It is possible that there may be downward pressure on the Company’s share price due to
speculative trading and/or declining market conditions during the acceptance period, resulting in
the market price trading below the Rights Issue price. However, it is critical for shareholders to
focus on the long term value accretion that the success of the Rights Issue will bring to the
Company which will ultimately lead to an increase in the overall return on investment for each
shareholder.

Q. At what price will the Rights be traded?
A. Rights are typically traded at a premium to the Rights Issue price and the traded rights price is
determined by the forces of demand and supply. Kindly contact your stockbroker who will advise
you on the necessary documentation and steps to trade the rights.

Q. What exchange rate will apply to funds in flowed by foreign investors to pay for rights?
A. The Nigerian Autonomous Foreign Exchange rate (“NAFEX”) also known as the Investors’ &
Exporters’ Foreign Exchange (“IEFX”) window through which investors can inflow or outflow
money. This provides a mechanism through which investors and exporters can sell foreign
currency to willing buyers.
Excelsior Shipping Company Limited

Q. If the Rights Issue is not fully subscribed, will Excelsior take up the balance?
A. Excelsior is fully supportive of FMN, its Board, management and strategy. The Board would
encourage all shareholders to take up their Rights to ensure that the offer is fully subscribed. All
shareholders will also have the opportunity to apply for additional shares not taken up by other
shareholders. Excelsior has indicated that it is fully committed to the success of the Rights Issue
and is willing to take up its rights in full. However, the final decision on Excelsior’s take up will be
made by Excelsior in due course.

Q. Is this an attempt by Excelsior to increase its stake in FMN?
A. The proposed Rights Issue ensures that shareholders can maintain their pro rata shareholding in
the Company. However, all shareholders also have the opportunity to increase their holdings by
applying for additional shares in the event that some shareholders do not take up their rights.
Excelsior has indicated that it is fully committed to the success of the Rights Issue and is willing
to take up its rights. Excelsior would also like the Company to maximise minority shareholder
uptake in the Rights Issue. However, in the event of undersubscription, Excelsior will consider
the opportunity available to all shareholders to take up additional rights.

Q. Will Excelsior get preference on any unsubscribed rights?
A. No. All shareholders of FMN, including Excelsior, have equal participation rights in the Rights
Issue and will be treated on the same terms. Consequently, Excelsior will not get any preferential
treatment in the Rights Issue. All shareholders are entitled to apply for additional shares, over
and above their provisional allocation. Allocation of additional rights will be done on a pro rata
basis in line with regulatory provisions and subject to final clearance by the Securities and
Exchange Commission.

 

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