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Business Finance Info & Updates

Sunu Assurances completes share capital reconstruction

Sunu Assurances Nigeria Plc has completed its massive share capital reconstruction, which reduced the company’s issued share capital from 14 billion ordinary shares of 50 kobo each to 2.8 billion ordinary shares of 50 kobo each.

The newly reconstructed shares were listed on the Nigerian Stock Exchange (NSE) after the previous share capital was delisted. The NSE subsequently lifted suspension on the shares of Sunu Assurances and trading has since resumed on the stock.

The share capital reconstruction saw the cancellation of 11.2 billion ordinary shares of 50 kobo each, 80 per cent of the company’s issued share capital.

The cancellation of 11.2 billion ordinary shares of 50 kobo each out of its issued 14 billion ordinary shares of 50 kobo each was part of a recapitalisation plan aimed at increasing the capital base of the insurance company to the new minimum capital base.

The share capital reconstruction resulted in the cancellation of four existing ordinary shares out of every five ordinary shares held by shareholders as at the close of business on Friday, October 16, 2020.

Shareholders of Sunu Assurances Nigeria had at an extra-ordinary general meeting in March 2020 approved the share capital reconstruction. It also received approval from the NSE.

The company had stated that the purpose of the share capital reduction was “to allow for the issuance of new ordinary shares by way of a rights issue and private placement, in order for the company to comply with the recently revised share capital requirement by the National Insurance Commission (NAICOM) for insurance companies”.

The company explained that the share capital reconstruction was adopted as the more efficient approach to creating room for new equity capital issuances.

“The share capital reconstruction will lead to the cancellation of 11.2 billion ordinary shares and result in an increase in the share price to N1. This will enable the rights issue, private placement and any subsequent equity capital raising to be priced above the nominal value of 50 kobo,” the company stated.

According to the company, the shortfall between its paid up capital and NAICOM’s new capital requirement of N10 billion for non-life insurance companies was N7.71 billion as at September 30, 2019.

The company stated that it is exploring a recapitalisation plan to augment the shortfall ahead of the December 30, 2020 deadline for compliance with the new minimum capital base.

NAICOM had in May 2019 released new capital requirements for insurance businesses with a 13-month compliance period for operators to shore up their minimum capital base to the required level. The minimum paid-up share capital of a life insurance company was increased from N2 billion to N8 billion, non-life insurance from N3 billion to N10 billion, composite insurance from N5 billion to N18 billion while re-insurance companies were directed to raise their capital base from N10 billion to N20 billion.

SUNU Assurance Group had in 2016 acquired 60 per cent equity of the former Equity Assurance Plc and renamed the company SUNU Assurances Nigeria Plc. SUNU Assurance has operations in not less than 12 Franco-phone African countries and the acquisition of Equity Assurance was a major entry strategy into the Anglo-phone countries.

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