… To Get N125 Per Share
By John Okoh
Shareholders of 7Up Bottling Company Plc (SBC) on Thursday at an Extra Ordinary Meeting (EGM) which was ordered by the court in Lagos approved the delisting of the company from the daily official list of the Nigerian Stock Exchange (NSE). Following this approved delisting of the company, shareholders will be paid N125 per share. The N125 to be paid to shareholders was revised upward this week, as against N112.70 kobo that was earlier proposed to shareholders.
The new offer price represents a 22.6 percent premium to the last traded share price of the Company on January 9, 2018; and a 27.6 percent premium to the price on August 10, 2017 which was the last business day prior to the date the initial proposal was received from Affelka.
The delisting process started when the majority shareholders of 7Up Bottling Company Plc, Affelka South Africa, proposed to acquire all the outstanding and issued shares of the soft drink company that are not currently owned by Affelka. The scheme involve the transfer of 171,542,574 ordinary shares of 50 kobo each, with a nominal value of N85,771,287 comprising of the company’s issued and paid up share capital representing the minority shares.
Through the scheme, the shares will be transferred to Sparkplexi Limited, a subsidiary of Affelka S.A, the majority shareholder.
At the conclusion of the process, Affelka and Sparkplexi would be the remaining shareholders of 7Up Bottling Company Plc, with Affelka owning 73.22 percent and Sparkplexi owning 26.78 percent. Following the scheme, the company will be re-registered as a private limited liability company pursuant to the relevant provision of the Company and Allied Matters Acts (CAMA).
However the company noted in the scheme of arrangement to shareholders that the financial performance of the company over the last couple of years has been predominantly negative, as a result of the myriad of challenges imposed by the unfavourable macro-economic environment, such as sharp currency devaluation resulting in a massive escalation in the cost of raw materials, distribution, increasing overheads, high debt servicing costs due to increases in interest rates and borrowing expenses as well as the extremely competitive environment with the entrance of new privately owned companies, flooding the market with cheaper products which makes the company unable to pass on the increased costs to the end consumer.
Accordingly, the board believes that the operating dynamics of the company are unlikely to improve in the foreseeable future and that, in the absence of a comprehensive corporate and financial restructuring, the company’s shareholder book value of equity, which lost 47 percent year on year in full year 2017 will be further eroded by the continued losses.
Going forward, the 7Up Bottling Company board believes that the current arrangement should create considerable benefits and opportunities’ for the employees and other stakeholders of the company in the area, for instance, of protection of minority shareholders who experienced 47 percent erosion in shareholder book value of equity in the last financial year.
The restructuring will enable Affelka to provide the support required for 7Up Bottling Company to shore up the balance sheet and capital required for maintaining and expanding the business, enhance product portfolio which will enable the company to better compete with its industry competitors and reinforce Affelka’s long term commitment to make 7Up Bottling Company as one of the leading manufacturing companies in Nigeria.