Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC), has rejected the move by Nigerian Enamelware Plc to convert a major shareholder’s debt to equities.
The commission also declined request by the company to issue bonus shares alongside the debt conversion.
The Board of Directors of the company said the rejection of the debt conversion and bonus issue affected the ability of the company to resolve its unallotted shares ahead of the December 31, 2022 deadline.
In a regulatory filing, the company stated that it has also decided to cancel a new bonus issue of three new ordinary shares for every two ordinary shares announced on February 28, this year.
At the 62nd Annual General Meeting (AGM) of the company in November 2022, shareholders had authorised the company to convert the N214.76 million debt owed l.Feng Company Limited into 42.95 million ordinary shores.
The meeting authorised the company to allot the debt conversion shares to l.Feng Company Limited at a conversion price of N5 per share through a special placing or private placement arrangement.
The meeting also mandated the company to allot and issue bonus shoares to its shareholders on the basis of one new share for every one shore held by a shareholder.
The two resolutions were expected to deal with the unalloted shares of the company before the deadline of December 31, 2022.
However, the share conversion and bonus issuance transactions were declined by SEC, thereby affecting the conclusion of the transactions.
Following the regulatory disapproval, the Board of Directors also decided to validate the company’s previous bonus issuance transaction to the shareholders accordingly and, therefore, proposed the issuance of a bonus of three new shares for every two shares held.
The company, however, noted that upon deliberation and review of the proposed bonus issuance, the board considered it “absolutely necessary and deem it fit to cancel the proposed shore bonus of three new shares for every two shared held”.
The company regretted the cancellation and sought the understanding of shareholders.