United Bank for Africa (UBA) Plc on Tuesday started a process to cancel 2.08 billion ordinary shares valued at N19.7 billion that belonged to the bank’s Staff Share Investment Trust Scheme (SSIT).
The share cancellation is part of the closure process for the bank’s SSIT, ending the practice of allocating shares to employees. Shareholders of the bank had at the annual general meeting in 2016 approved the cancellation of the shares under the SSIT in line with the board’s decision to close the SSIT.
A total of 2.08 billion ordinary shares of 50 kobo each under the SSIT was crossed to UBA at a price of N9.47 per share on Tuesday at the Nigerian Stock Exchange (NSE).
Group Company Secretary, United Bank for Africa (UBA) Plc, Bili Odum, stated that with the transfer of the shares from the SSIT, the bank will complete all relevant processes to effect the cancellation of these shares.
“Upon cancellation of the 2,080,104,955 units of ordinary shares, the outstanding shares of UBA Plc will be reduced by the amount accordingly,” Odum stated.
UBA currently has 36.28 billion ordinary shares of 50 kobo each valued at the close of the market yesterday at N319.26 billion.
Market analysts have however raised concerns that the bank has not fully disclosed details about the SSIT, alleging that the SSIT was used as a front to warehouse shares and illegally inflate subscription level during the heyday of the public offer in 2005 to 2008.
Analysts said the directors of the bank should disclose the whereabouts of the dividends paid over the years on the cancelled shares and the reason for the warehousing of the shares.
The management of the bank however stated that the cancellation would lead to value accretion to shareholders, as the enterprise value of the group remains unchanged.
“The unit holding of all shareholders remains the same, whilst their respective percentage holding in UBA Plc will increase,” the bank stated.
According to the bank, the cancellation of SSIT shares has no impact on its liquidity and capital adequacy ratios as it continues to maintain strong liquidity and capital adequacy ratios, which stood at 41 per cent and 19.4 per cent respectively, as at March 31, 2017.
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