UACN Property Development Company Plans N16bn Rights Issue

UACN Property Development Company (UPDC) Plc is to raise N15.962 billion fresh equity capital from existing shareholders as part of its recapitalization and restructuring efforts. The capital would be raised through the issuance of 15,961,563,260 ordinary shares of 50 kobo each at N1.00 per share on the basis of 43 new shares for every seven shares held. The company disclosed the plan of fresh capital injection in a notification to the NSE.

Before now, UAC of Nigeria (UACN)Plc, which is the parent firm of UPDC had announced a collective consideration of strategic initiatives involving a recapitalisation and restructuring of UPDC.

UACN had explained that it was in the process of a strategic review, evaluating its performance and its subsidiaries. The objective is to achieve sustainable positive financial performance from its existing operations and enable management focus on businesses that align with its strategy.

“In reviewing UPDC, the board weighed the long-term opportunities in the Nigerian real estate sector against the fundamental differences between the cashflow profile and capital needs of UPDC versus other entities in UAC’s portfolio. Following its review, the board concluded that it would be in the best interest of respective stakeholders of UACN and UPDC if UACN’s equity interest in UPDC is ‘unbundled’ such that UACN no longer holds any shares in UPDC and UPDC operates as a standalone legal entity, free to source appropriately structured capital,” the company said.

On the other hand, the board and management at UPDC have focused on developing strategies to stabilise UPDC’s capital structure and unlock value for shareholders. Hence, two significant strategic initiatives, recapitalisation and a concurrent restructuring, are being proposed.