Nigeria Content Online

Some investors at
the Nigerian capital market have threatened a liability lawsuit against
the management of the Nigerian Bottling Company (NBC) should it insist
on paying N43 per share as pay-off price for compensating them.

The management of
the NBC, bottlers of Coca Cola and other drinks, had, two weeks ago,
notified the Exchange of its “proposed scheme of arrangement between
the company and its members, involving a cancellation of part of its
share capital.” The proposed scheme envisaged a cash payment of N43 per
NBC share as consideration to the minority shareholders.

Meanwhile,
following the proposed cash payment, the demand for the NBC stock has
increased; hence, pushing up its value significantly. The price of
stock, which was at N30.03 per share before the announcement was made
fortnight ago, now stands at N38.30 per share as at Thursday;
representing an increase of 27.53 per cent in two weeks.

David Amaechi, an
executive member of the Shareholders Association of Nigeria, said,
“With this development, investors can no longer accept the proposed N43
per share,” adding that any pay-off price that is less “N80 per share”
will result into “us (shareholders) filing a liability lawsuit against
the NBC.” Sunny Nwosu, national coordinator of the Independent
Shareholders Association of Nigeria, said it is good that the price is
currently going up “because we are not accepting the proposed N43 per
share. In fact, it is not yet agreeable that they should delist because
we helped to create credibility and value for the company.” Mr Nwosu
said, “We are the only people that trade on their share to get such a
value. Therefore, if they feel strongly that they want to bring in
fresh funds into the business, they also ought to have taken us into
confidence to say we need this amount of fresh funds. On the ration of
shareholders’ holdings, we could as well be asked to bring an amount to
the company; which they did not do.” He said if investors had given
value and respect to a company and the firm plan to delist “it should
be able to discuss with us and we’ll agree on the buyout price.
Everywhere in the world, if there is such a buyout, it carries heavy
premium. In other words, we are not agreeing to the delisting of Coca
Cola bottler until we agree on a reasonable buyout price.”

Investment rights

A legal team at
Oserogho & Associates, business solicitors, said the minority
shareholders of a company “have the right to bring derivative actions,
in the name of the company, where wrongdoers are the controlling
directors of the company, who have by their actions or inactions or
omissions infringed upon the individual rights of the minority
shareholders.” They said investors need to acquaint themselves with the
plethora of judicial authorities included in the provisions of the
Companies & Allied Matters Act which are available to all
shareholders, including the minority shareholders, to protect their
investment rights.

Meanwhile, market
watchers have suggested that the Nigerian Stock Exchange should place
the NBC’s share on “technical suspension” to protect price movement on
the stock. Wole Tokede, the spokesperson for the NSE, however said he
is not sure if the Exchange will consider the option of technical
suspension.