Union Bank gets Court Nod for Recapitalisation Plan
Category: Mergers & Aquisitions
September 01, 2011/11:20pm
A Federal High Court sitting at Lagos yesterday directed that a meeting of shareholders of Union Bank of Nigeria Plc be held in Abuja on September 30 to approve the Scheme of Arrangement between the lender and its potential core-investor - the African Capital Alliance Consortium (ACA Consortium).
This will automatically pave way for Union Bank, which is the only stand alone bank out of the eight rescued banks, to be recapitalised in line Central Bank of Nigeria’s (CBN) deadline.
At the meeting, according to a statement from the Union Bank, shareholders are expected to approve the new paid up share capital for the lender as well as the ratio of ordinary shares to be held by existing shareholders of in the new dispensation.
They will also approve the allocation of shares to the Asset Management Corporation of Nigeria (AMCON), which is expected to move Union Bank from negative to zero capital.
Also for approval are the 1,407,291,667 ordinary shares of 50 kobo each to be offered to existing shareholders by way of a rights issue.
Union Bank was one of nine banks (Wema Bank, Afribank, Spring Bank, BankPHB, Intercontinental Bank, Oceanic Bank, Finbank, and Equatorial Trust Bank) rescued in a N620 billion bailout by the banking watchdog in 2009.
Already, Wema Bank and Unity Bank havebeen recapitalised, while Afribank, Spring Bank, BankPHB have been nationalised and their assets transferred to the three newly formed banks – Mainstream, Enterprise andKeystone. This followed the defunct banks inability to show that they would be recapitalised before the September 30thdeadline.
Some of the shareholders of the liquidated banks had refused to adopt a pragmatic approach thereby frustrating the whole process. They resorted to legal interference to stop the management of the banks from negotiating with interested investors all in a bid to protect their selfish interests and oil their wheel of greed, disregarding the proviso that that the regulator would have no option than to liquidate banks for which negotiation cannot be concluded before the end of the set deadline.
The AMCON CEO, Mustapha Chike-Obi has said that if the various opposing shareholders do not retrace their steps and rethink quickly, their banks would also be liquidated. This means that the shareholders in these banks will lose their investments.
Although five banks, namely: Intercontinental Bank Plc, Oceanic Bank, Finbank, Union Bank and Equatorial Trust Bank (ETB) had signed TIAs with their co-investors, the conclusion of the process depends on the regulatory approval and court ordered shareholders meeting to endorse and approve the deals. It has also been mentioned that these banks have obtained their court ordered meeting approval meetings as follows – Intercontinental (26th September); Oceanic Bank (27thSeptember); Finbank (29th September ); Union Bank (30th September).
The aim was to ensure they beat the apex bank's deadline for recapitalisation and place them in a position to hold Extraordinary General Meetings (EGM).
The last of the five rescued banks to file TIA is ETB, which it has with Sterling Bank Plc, and informed sources also confirmed that their process will be concluded early next week.
The rescuers of the five banks are Access Bank Plc, (Intercontinental Bank Plc), Eco Bank Transnational Incorporated, (Oceanic), FCMB Plc, (Finbank).
Others are African Alliance Capital (Union Bank) and Sterling Bank Plc (ETB).