Three months after it informed investors through the Nigerian Stock Exchange (NSE) of plans to reacquire its own shares, the board of United Bank for Africa Plc, on Wednesday gave effect to a resolution of its shareholders at an annual general meeting in April 8, 2016, to immediately cancel 2,080,104,954 or 5.73% of its ordinary shares from the Daily Official List of The Exchange.
The cancelled shares, initially held under the bank’s Staff Share Investment Trust Scheme (SSITS), has reduced UBA’s outstanding shares from 36,279,526,322 before the cancellation, to 34,199,421,368 units.
The initial acquisition of the shares, originally about four billion units, were set aside for the SSIT from which its staff acquired UBA shares whenever it was offered by management, up to the point it had 2.08bn unalloted.
The cancellation involved no cash consideration of any kind, except that UBA’s market capitalization reduced by N18.72bn as a result.
However, as if a sign of shareholder approval of the move due to its effects on the improved earnings power, UBA’s share price improved by 21 kobo or 2.39%, closing at N9.00 per share.
According to the group’s statement in July signed by Bili Odum, Group Company Secretary, the transfer of the unalloted shares from the SSIT “is part of the process of executing the Special Resolution of the shareholders at the annual general meeting held on Friday, April 08, 2016, to cancel the shares.”
While not affecting the stake of current shareholders, the cancellation, nonetheless raises their percentage shareholding.
Significant shareholders of the bank as of year-end December 31, 2016 were as follows: Stanbic Nominees Nigeria Ltd: 11%; UBA Staff Investment Trust Scheme: 7.6%; Consolidated Trust Funds Ltd, 4.7%; The Bank of New York Mellon, 4.4%; Heirs Holding Ltd, 3.4%; STH, 2.6%; Bank of America Merrill Lynch, 2.3%; International Finance Corporation, 1.8%; Poshville Investment Ltd, 1.7%; BGL Securities Ltd/MM, 1.1%.
Following the cancellation, the group’s earnings per share based on which directors recommend dividend payment, and other key parameters would increase for the good of shareholders.