Foremost leasing company, C and I Leasing Plc, has filed an application with the Securities Exchange Commission (SEC) for an approval to undergo its proposed Right Issue of 539 million ordinary shares of 50 kobo each at N6 per share, on the basis of 4 new ordinary shares for every 3 ordinary shares held.
Subject to the approval of the capital market regulator, the company shall hold a signing ceremony to execute all offer documents before opening the offer in line with the approval obtained.
In a statement by the Company Secretary, Mbanugo Udenze & Co., the company disclosed that the Rights circular would be distributed to shareholders while application forms would also be made available on the website of the company’s Registrar for ease of access.
Prior to this development, the firm had through its Stockbroker, CSL Stockbrokers Limited, sought the approval of the Nigerian Stock Exchange (NSE) for the listing of the Rights Issue.
Possible reasons: The proposed Rights Issue is poised to increase the company’s profit and at the same time boost its financial growth.
It is however of common knowledge that Rights issue is generally a way for companies to raise capital. In this regard, capital is raised from existing shareholders when they are to pay for newly issued shares based on their shareholding.
C and I Leasing may use the raised capital to acquire new assets, business expansion, repay debts or save itself from bankruptcy. Although a company can raise capital in other ways, such as borrowing from banks or issuing bonds, there are times when companies are reluctant to seek credits from banks because of the high-interest rates involved in accessing such loans.
A look into the company’s financial records: C and I Leasing Plc recorded significant growth in its half-year results, as the company recorded gross earnings of N16.3 billion, up by 27.2% from the N12.8 billion recorded in 2018 H1.
The company’s Profit before tax increased by 25.8% from N723 million recorded in 2018 H1, to N909.2 million in 2019. Similarly, C and I Leasing realised a profit after tax of N866.9 million, up by 27.1% year-on-year from N682.2 million recorded in 2018.