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Shareholders decry Union Bank, ACA’s $750m recapitalisation agreement

By on March 30, 2011

The recapitalisation agreement recently embarked upon by Union Bank with African Capital Alliance (ACA) may be heading for the rocks, as shareholders of the bank have described the move as an exercise in futility.

The shareholders said that with this singular action, the Central Bank of Nigeria Governor, Mallam Sanusi Lamido, and the management of the bank led by Mrs Funke Oshibodu, must face contempt charge so as to serve as deterrent to others in the industry.

The bank, despite a court order, had, last week, entered into $750 million deal with a group of international investors led by the African Capital Alliance even as the recapitalisation was said to enhance the banks liquidity, corporate governance and capital adequacy and restore its strong competitive position.

Investigation by the Nigerian Tribune, at the weekend, showed that the bank had notified the Nigerian Stock Exchange (NSE) of its executed memorandum of agreement (MoA) with the African Capital Alliance Consortium even as the core investors were said to have been selected by the bank’s Board of Directors.

In his reaction, the President of Progressive Shareholders of Nigeria, Mr Boniface Okezie, said it was sad that the CBN and appointed management of the bank were disposing off the property of bank which had brand all over the globe.

According to him, the bank entering into an agreement with an institution is embarking on an exercise in futility, and that there are plethora of cases in court challenging the eligibility of the management of the bank in directing the affairs of the bank.

Okezie said that shareholders were willing to buy the bank, noting that the Oshibodu-led management had failed despite several representations from owners about the true financial position of the bank and were now trying to arm-twist the shareholders to let go of their legacy.

He said the present action of the bank’s officials was tantamount to seeking to enrich their pockets by selling the bank at a ridiculous price.

“They want to short-change the minority shareholders, but they will fail. We will resist them with everything in us,”he said.

In his comment, the National Coordinator of the Independent Shareholders Association of Nigeria (ISAN), Mr Sunny Nwosu, said, “when we get to the bridge, that is the stakeholders’ meeting which they have arranged to include shareholders, we will know what to do.”

He added there was a case already in court in which the bank’s management were being challenged to render account. “I think they should have a rethink about it,” he added.

Union Bank has become the first of nine rescued banks to sign a recapitalisation agreement with a new investor.

The 750 million dollars deal was sealed with a group of institutional investors led by the African Capital Alliance.

However, the agreement, according to the CBN governor, is subject to final approval by shareholders, CBN, the Securities and Exchange Commission, the Nigerian Stock Exchange and a federal high court.

The CBN governor announced that two more rescued lenders were in talks with potential buyers with one of the banks expected to make an announcement.

Source : Tribune