Transcorp to raise new equity funds for power projects
Transnational Corporation of Nigeria (Transcorp) Plc would use the net proceeds from its planned rights issue to finance its investments in power projects.
A source close to the company told our correspondent that the net proceeds from the supplementary rights issue that would likely open in the second quarter would be used to specifically finance power projects.
According to the source, the rights issue was decided on because of the importance of equity funds as major catalyst towards achieving rapid growth in this phase of the conglomerate business.
'It is in line with our planned strategy and will specifically be used in power as well as other investments pre-identified for this purpose,' the source stated.
Transcorp had intimated the investing public that it plans to raise new equity funds from its shareholders through the issuance of 13 billion new ordinary shares of 50 kobo each.
The conglomerate plans to increase its authorised share capital to create headroom for the supplementary issue. It would be increasing its authorised share capital from N18 billion to N22.55 billion ordinary through the creation of 9 billion new ordinary shares of 50 kobo each. Transcorp has 25.81 billion ordinary shares outstanding on the Nigerian Stock Exchange (NSE).
Shareholders of the company are scheduled to meet on Thursday March 28, this year to consider and approve the resolutions on the increase in authorised share capital and to empower the board to float a rights issue 'in such proportion, at such time, for such consideration and upon such terms and conditions as the directors may deem fit.'
Transcorp had traded at a high of N1.96 this year.The conglomerate's market consideration floated between a high and low range of N1.42 and 50 kobo in 2012, before closing the year at N1.05 per share.
Transcorp Consortium had emerged the highest and preferred bidder for the Ughelli Power Plc under the Federal Government's power privatisation exercise. Transcorp consortium offered $300 million for the power firm. The Transcorp consortium included companies such as Wood Rock; Symbion Power LLC, USA; Medea Development; PSL Engineering and Control and Thomassen Services and Contracting Company.
Often cited in relation to the boom in the telecoms sector, most analysts perceive the power firms as cash cows that would not only generate power but significant returns for investors. The monopolistic nature of the system and centrality of the success of the privatisation to government's transformation agenda confer enormous advantages on the power companies.
Chairman, Transcorp, Mr Tony Elumelu, also said the conglomerate has started the execution of its expansion plans to fully utilise the massive unutilised land on its Transcorp Hilton Abuja site and roll out new hotels across major economic centres in Nigeria, such as Lagos and Port Harcourt.
According to him, the conglomerate has taken several significant steps in its key sectors of agri-business, energy and hospitality - that would no doubt see Transcorp taking its rightful place as a key player in the economic development and transformation of Nigeria.
Besides, Transcorp had recently caused the revision of the terms of partnership in its Oil Processing License 281 (OPL 281) in Nigeria. The revised terms were said to be as a result of a change of control in Transcorp as the conglomerate sought to fully take responsibility for the operation of the block in its bid to become a leading indigenous oil and gas upstream company with production.
Interim report and accounts of Transcorp for the period ended September 30, last year had shown that the conglomerate continued to optimise its profitability.
Profit before tax stood at N1.7 billion in September last year as against N922.7 million recorded in comparable period of 2011. Profit after tax stood at N1.50 billion in 2012 compared with a net loss N77.22 million in comparable period of 2011.
The conglomerate's operating expenses had dropped from N778 million in 2011 to N689.7 million in 2012 as it continued to reap from cost optimisation strategy. Total assets grew by 19.44 per cent from N23.32 billion in 2011 to N27.85 billion in last year. The Nation