Transnational Corporation Plc (Transcorp) has unveiled its strategy to restructure its share capital by reducing the number of its issued ordinary shares.
The company’s current share capital stands at N20.323 billion, represented by 40,647,990,293 ordinary shares of 50 kobo each.
United Capital Plc and Vetiva Advisory Services Limited are overseeing the financial advisory role for Transnational Corporation Plc in relation to the share reconstruction.
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The proposed share reconstruction will involve consolidating the issued ordinary shares, with a consolidation ratio of 1 for 4. This means that 3 out of every 4 ordinary shares held by Transcorp’s shareholders will be cancelled. The Financial Reporting Council of Nigeria (FRCN) and the Securities and Exchange Commission (SEC) have granted their approval for the reconstruction.
Upon completion, the cancellation of 30,485,992,719 ordinary issued shares of 50 kobo each will result in the reduction of the issued share capital to N5.080 billion, represented by 10,161,997,574 ordinary shares of 50 kobo each.
The share capital reconstruction aims to enhance Transcorp’s capital structure, making it more streamlined and efficient. According to Meristem research analysts based in Lagos, this strategic move will strengthen the company’s balance sheet, potentially increasing its attractiveness to investors and lenders.
For Transcorp shareholders, this reconstruction eliminates the risk of dilution and provides confidence in the stability of their investment. However, it may lead to reduced liquidity of the stock on the exchange due to fewer shares available for trading.
Following approval by Transcorp’s shareholders, an application will be made to the Federal High Court for confirmation of the Reconstruction. Subsequently, the remaining shares of the Company will be re-registered with the SEC.
Shareholders’ accounts with the Central Securities Clearing System (CSCS) will be adjusted accordingly after the Effective Date approved by the Court. The Nigerian Exchange Limited (NGX) will be notified to place Transcorp’s shares on full suspension pending confirmation of the reconstructed shares by the SEC.
The reduction in the number of shares will not affect shareholders’ proportional ownership in Transcorp, ensuring no dilution of shareholding. The nominal value of ordinary shares will be maintained through this process.
Additionally, the balance of N15.242 billion from the cancelled shares will be credited to a special reconstruction reserve, earmarked for future shareholder distributions or value-enhancing endeavors.
Upon lifting of the suspension, there will be a proportional upward adjustment in the quoted share price of Transcorp’s shares on the NGX, ensuring that the company’s market capitalization and shareholders’ percentage holding remain unchanged post-reconstruction.
