Shareholders of Union Bank of Nigeria Plc will meet on Tuesday, June 11, 2019, at an extraordinary general meeting where the board seeks approval for capital reduction and share capital reorganization.
The plan is part of efforts by the directors to free the company of all encumbrances that has prevented it from paying its shareholders dividends from its future profits.
Specifically, the board seeks to clean up its balance sheet by writing off Union Bank’s established accumulated loss of N54.458bn in its profit and loss account arising from legacy transactions, in addition to the N247.868bn approved by shareholders in 2017.
The N54.458bn losses will, subject to shareholders’ consideration and approval at the EGM, be written off the bank’s N187.091bn share premium account, reducing it at N132.633bnwhile leaving the aggregate shareholders’ funds unchanged.
According to an explanatory note on the capital reduction, “it would have no impact on the bank’s creditors but rather, pave the way for the bank’s investors to receive dividends out of the bank’s future profit.”
The retained deficit will, therefore, be cleaned out post-transaction, leaving N6.722bn earnings.
Also at the meeting, the directors will be asking for approval “to seek confirmation from the Federal High Court,” according to Somuyiwa Adedeji Sonubi, the company secretary.