Delisting plan leaves many questions unanswered

Nigeria is left licking her wounds once more with the planned delisting of Nigeria Bottling Company, bottlers of Coca Cola and other soft drinks, from the Nigerian Stock Exchange.

NBC recently announced that its parent company, Coca-Cola Hellenic Bottling Company South Africa, intends to invest up to N45 billion in Nigeria between 2011 and 2013 in order to expand its commercial base. Consequently, the proposed transaction will involve the cancellation of part of the share capital of NBC, so that it would become a wholly-owned subsidiary of Coca-Cola Hellenic. The proposal includes a cash payment of naira 43.00 per NBC share as consideration to the minority shareholders.

However, some market operators have raised concerns over the absence of policies that ensure multinationals have part of their equity percentage listed on the bourse for the benefit of local investors.

“I’ve seen in some jurisdictions, Ghana for instance, when the government wants to licence a multinational company, they will tell them the necessity of ensuring that part of the equity percentage of the company will be thrown to the home-based investors within a particular period,” Sunny Nwosu, the national coordinator of the Independent Shareholders Association of Nigeria, said.

Mr. Nwosu asked that the Nigerian government should also have a means of persuading multinational companies in the telecommunication, oil and gas sectors to be listed on the Exchange.

“A company like MTN, Shell, and Chevron and other exploration companies should also be persuaded to list their companies. Their ordinary 10 percent equity will deepen the market and give a lot to local investors,” he said.

Mr. Nwosu blamed Nigerian directors in those companies for their greed.

“I blame the directors because they could not advice the foreigners on how to ensure that the power of Nigeria spending is shared through profits to Nigerians,” he said.

He added that “any value that a company like MTN is having today is a value created by majority of Nigerians; not a few of them as directors. If Nigerians today say they are not going to patronise MTN, definitely the business will collapse. MTN has been selling its shares in dollars to eliminate common Nigerians from participating.”

The same sentiment was expressed by Boniface Okezie, the national chairman of the Progressive Shareholders Association of Nigeria, who claimed investors are not happy with the delisting plan “since the company is still making money because Nigerians are the consumer of their products. Nigeria is the main destination for investment in Africa.”

Mr. Okezie said the company’s attitude shows that “it doesn’t want to be regulated again,” adding that “if the environment is not conducive for them, they can wind up and leave the country.”

Investors should be concerned

In the meantime, finance analysts said the capital market community should “worry” about the delisting plan because the “move would naturally translate into a reduction of market capitalisation.”

Analysts at Proshare Nigeria, an investment advisory firm, said the immediate effect is the “blow on the image of the NSE as an avenue for raising capital and trading in the securities of listed companies.”

They added that “The NSE and the Securities and Exchange Commission (SEC) should be worried that our market is perceived as having failed in both important criteria of successful markets.”

It remains unclear as at press time, SEC plan of action on the delisting plan. Several attempts to get comments from Lanre Oloyi, spokesperson of the SEC, and Simon Obidairo, personal assistant to Arunma Oteh, SEC’s director general, went unsuccessful as their phones were switched off.

But Wole Tokede, the Exchange spokesperson, said NBC plan “does not have anything to do with loss of confidence in the capital market.” Mr. Tokede said that the Coca-Cola producing company has its reasons for delisting, adding that it is a choice of a company to either be listed on the Exchange platform or not.

Meanwhile, the chairman, House of Representatives committee on capital market, Umar Jubril, in a telephone interview, promised that the committee “will sit down with the managements of the NSE and SEC to deliberate on the development” to ensure shareholders’ interests are protected.

He said the committee is thinking in the direction of wooing more multinationals to be listed in the Exchange. “We’ll try to lure MTN for instance, NNPC, and other companies that Nigerians can benefit from.”

Jim Lafferty, NBC managing director, in a statement, said the new investment plan of NBC is going to make Nigeria “one of the most important emerging economies in the world during the next decade.”

The NBC, one the companies in the AG Leventis Group, was established in Nigeria in 1951 and formed the foundation of Coca-Cola Hellenic, the largest Coca-Cola bottling group in the world. It was listed on the NSE on the 12th November, 1973.