Shares: Heirs Holdings' Strategic Buy Shocks Transcorp Board
SAN FRANCISCO, April 04, (THEWILL) - Tony Elumelu’s Heirs Holdings today announced that it has acquired a strategic stake in Transnational Corporation of Nigeria Plc (Transcorp) through HH Capital.
Though the company is yet to make public details of the acquisition, THEWILL sources inside the Nigerian Stock Exchange said the acquisition gives Heirs Holdings a strategic 10 percent (10%) stake in the company having acquired 2.5 billion units of the company’s shares on Friday, April 01, 2011, in a transaction that has raised eyebrows especially from the management of Transcorp, who have written to the Nigerian Stock Exchange to block the deal.
The Transnational Corporation of Nigeria Plc has about 25 billion outstanding shares listed on the Nigerian Stock Exchange. Its shares closed at N1.21k having maintained a steady 5% daily limit rise from N.50k on March 01, 2011, when South African SacOil announced it had acquired a 20 percent stake in an oil block owned by Transcorp.
The statement from Heirs Holdings on the acquisition signed by its Director, Marketing and Corporate Communications, JeNika P. Mukoro reads:
“ACQUISITION OF STRATEGIC STAKE IN TRANSNATIONAL CORPORATION OF NIGERIA PLC
“We are pleased to announce that in pursuance of our strategy of creating value and catalyzing the economic growth of Africa, through our long-term investment approach, Heirs Holdings Limited, through HH Capital, has acquired a strategic stake in Transnational Corporation of Nigeria (Transcorp) Plc.
“Heirs Holdings is a principal investment vehicle, with a diversified portfolio, including interests in the financial services, real estate and resources sectors. Heirs Holdings typically adopts a long-term investment approach, seeking to add value through the contribution of directorship and execution skills to its portfolio investments.
“Transcorp shareholders will benefit from the Heirs Holdings track record of value-creation, particularly smaller shareholders who subscribed to the original vision of the company as a means of mass participation in Nigeria's economic success.
“Heirs Holdings has structured its investment to ensure that all shareholders will continue to participate in the listed company and benefit from the considerable upside believed to be represented in Transcorp.
“Our Chairman, Tony O. Elumelu who was a founding director and investor believes strongly in the founding vision of Transcorp as a means for Nigerians to access the abundant economic opportunities present in the country, through the capital markets. Heirs Holdings will engage positively with the board and management of Transcorp, so the transformation we envisage for the company can be implemented and conducted in a spirit of cooperation, for the greater good of all shareholders.
“Heirs Holdings will continue to identify similar opportunities across Africa, which we believe will enable us to achieve our ambition of building exceptional value for all of our stakeholders and fellow shareholders.”
Reverse the Deal Says Transcorp
However, the management of Transcorp in two separate letters to the Nigerian Stock Exchange obtained by THEWILL courtesy of our partner Proshare, dated April 01, 2011 and April 04, 2011, the company expressed shock that the NSE approved the deal.
The letters from Transcorp reads:
"April 01, 2011
The Director General
Nigerian Stock Exchange
RECENT VOLUME MOVEMENTS IN THE SHARES OF TRANSCORP PLC TRADED ON THE FLOOR OF THE NIGERIAN STOCK EXCHANGE
We write in relation to the above.
On March 31, 2011, a total of 2.51 billion units of Transcorp Plc shares representing 10% of the company’s issued share capital were traded in a single day, the largest volume of a company’s shares traded in one day in the past one year.
The Board of Directors and Management of the company have expressed shock at how such a transaction was approved by the Stock exchange without information to and consent of shareholders and the company. The Board have also been reliably informed by an individual that he has acquired a significant proportion of the shares of the company and plans to take over the business.
A transaction showing more than a 5% interest in the shares of the company should ethically have been disclosed to the company and the Securities and Exchange Commission, but this was not done in this case.
The Board and Management hereby object to such a transaction and request that due process and the provisions of law be allowed where an individual or group of individuals are interested in a controlling stake in the company.
In the interest of over 300,000 shareholders of Transcorp Plc, this letter has been copied to the Securities and Exchange Commission which is hereby put on notice to investigate potential or actual market abuse in this regard.
Transnational Corporation of Nigeria Plc
cc: The Director General, Securities & Exchange Commission."
"April 04, 2011.
The Director General
Nigerian Stock Exchange
Custom Street Lagos.
RE: RECENT VOLUME MOVEMENTS IN THE SHARES OF TRANSCORP PLC TRADED ON THE FLOOR OF THE NIGERIAN STOCK EXCHANGE (NSE)
Further to our letter dated April 1, 2011 in respect of the above, we hereby reiterate that the Rules and Ethics of the Exchange were not followed and these include the following:
1. The NSE approved broker handling the transaction must enquire from the buyer his/her existing holding in the company;
2. The broker must then proceed to review/add the volume of the intended transaction to/with the existing holding and determine if this goes above the 5% threshold;
3. The broker is therefore obligated to inform/alert The Stock Exchange if the transaction is above the 5% threshold;
4. The Stock Exchange must immediately alert the company of this intended trade, informing the buyer that it has done so;
5. The company would then have a chat with the buyer to determine if it is for investment purposes or a takeover bid or not, and to determine any interest such a person may have;
6. The company must within 48 hours get back to The Stock Exchange if they have any reservations or objections to such a transaction;
7. If it is a hostile takeover, the provisions of the ISA 2007 in respect of Take Over Bids would apply.
These basic ethos provide a basic framework in which such transactions should be conducted. To have a 10% volume movement treated as just any other transaction is an abuse of the market processes and the Board and Management hereby insists that this transaction should be cancelled.
We await your immediate response.
Yours faithfully, For: TRANSNATIONAL CORPORATION OF NIGERIA PLC
HELEN IWUCHUKWU COMPANY SECRETARY/LEGAL ADVISER
Cc: Director General, Securities & Exchange Commission Head, IT & Market Operations, Nigeria Stock Exchange."
NSE spokesman, Mr. Lanre Oloyi confirmed the receipt of the letters from Transcorp management and said the Stock Exchange has opened investigations into the claims made by the company.