STARCOMMS' SHAREHOLDERS RATIFY SHARE RESTRUCTURING, CAPCOM'S INVESTMENTS

http://www.nigerianbestforum.com/blog/?attachment_id=121828 Shareholders of the cash-strapped Starcomms Plc, the only telecommunications company listed on the nation's Stock Exchange, have voted for the re-organisation of its Share Capital structure as part of the requirements for its acquisition by Capcom, a special purpose vehicle created solely for the purpose.

Starcomms held a Court-ordered meeting at the weekend in Abuja to legalise the share capital re-organisation which will lead to Capcom's control of 95 per cent of the company's equity while the old investors and other interested parties to the deal will own the balance.

Consequently, the company is reducing significantly the number of its issued shares such that shareholders will now have one share for every 100 shares they had previously.

Speaking on the Scheme of Arrangement for the re-organisation of the share restructuring, the National Chairman of Renaissance Shareholders Association, Ambassador Olufemi Timothy, described the scheme as a timely move that was bound to restore hope to the company's investors and prospects for returns on their investments in the future.

While lauding the Board and management for the initiative, he described the exercise as a 'desirable sacrifice we have to make in order to ensure the survival of the company and make the investments to translate to future benefits for all stakeholders'

Similarly, another leading shareholders' leader and capital market analyst, Sir Sonny Nwosu, said the Scheme had become imperative in view of the operational challenges of the company over the years, adding that the coming of Capcom to save the company from imminent collapse is salutary to the efforts aimed at making the company to survive.

Nwosu, who is the National Coordinator of Independent Shareholders Association of Nigeria, carpeted the Nigerian Communications Commission (NCC) for allowing most of the CDMAs to go under and assured the new investors of shareholders' support in their efforts to revive the ailing company.

He said: 'I praise Capcom for coming otherwise we may not have any company to call our own in the near future. It is still better for us to have a small shareholding in the company with value than have a large one without any value if the company goes under.

I will like to appeal to my colleagues shareholders by conducting the election for restructuring of the Board at the AGM. We must learn from our past mistakes. We want to assure the new investors of our full support just as we will expect them to treat us with respect as stakeholders in the drive to revive the company and transform it into a major player in the telecommunications sector in the near future', Nwosu added

Other shareholders' leaders, including Chairman of the Zonal Shareholders' Mobilisation Committee comprising Lagos, Ibadan, Onitsha, Port Harcourt, Kaduna, Kano and Jos zones, Chief Olatunde Okelana; and National Coordinator of Shareholders' United Front, Mr Gbenga Idowu, shared similar views on the Scheme which, they said, represented the best option open to the company's investors in the sustained drive to keep going.

Addressing shareholders on why the Board opted for the Scheme, the interim Chief Executive Officer of  the company, Mr. Olusola Oladokun,  said the acquisition became imperative since the company had been  'facing operational and financial challenges on account of the shifting competitive landscape in Nigeria's telecommunications industry.'

The challenges, he explained 'have resulted in the company generating operational losses and functioning with unsustainable levels of debt and the reduction of weekly cash collections to unsustainable low levels.'

According to him, as part of the overall transaction with Capcom, both Helios Investment Partners, an African-focused private investment firm and AMCON, will acquire equity stakes in Starcomms derived from the Capcom shareholding on completion of the transaction.

To facilitate the investment by Capcom, Starcomms' shareholders endorsed a Scheme of Arrangement 'be effected to reorganize Starcomms' share capital, subsequent to which the company will undertake the private placement for the subscription of new shares by Capcom.'

The commercial understanding that was captured in the investment agreement between Starcomms and Capcom stipulates that the placing will entail Capcom contributing the investment consideration to Starcomms via the placing in exchange for such number of shares as will result in Capcom owning 90.5 per cent of Starcomms' share capital post-placing.

Under the transaction, Capcom will contribute investment assets, investment cash and other investment benefits. Capcom will also pay off Starcomms' outstanding NCC obligations up to $13,000,000 in exchange for receiving the subscription shares and conditional share subscription rights.

The investment assets that Capcom will bring to the table 'comprise the entire issued share capital of Cyancom and HIP oils, which include the spectrum of MTS and the CDMA business of Multi-Links respectively. Capcom has negotiated conditional sale and purchase agreement with the vendors of both assets, namely AMCON and Helios Towers respectively,' Oladokun said.