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Shareholders authorise Sterling Bank to raise additional capital

By BusinessNews Staff on November 13, 2014

The shareholders of Sterling Bank Plc on Tuesday authorised the board and management of the bank to raise additional capital in order to strengthen its operations and increase its capital adequacy ratio.

The shareholders endorsed the bank’s plan to raise fresh capital at an Extra-ordinary General Meeting of the bank, which was held in Lagos.

In giving the approval, the shareholders passed three special resolutions.

The first resolution reads, “That subject to regulatory approvals, the directors be and are hereby authorised to issue up to 7,471,698,113 ordinary shares of 50 kobo each from the company’s share capital by way of special/private placing to Messrs. Silverlake Investments Limited or such other identified strategic investor at a price of N2.65 per share or such other price as the directors may determine in the interest of the Company and subject to other terms and conditions and at such times as the directors may deem fit.”

The resolution also authorised the directors to, in respect of the private placing, appoint such advisers, professionals and parties that they deem necessary, upon such terms and conditions that they may deem appropriate.

The bank, which had raised N12bn via rights issue earlier, is expected to raise N20bn from the sale of the shares to Silverlake.

The second resolution authorised the directors to raise additional capital up to $200m or its equivalent in naira through any or a combination of the following: equity, global depository receipts, quasi equity, convertible loans, medium-term notes, bonds and any other debt instrument(s), whether secured or unsecured, senior or subordinated by way of a public offering, rights issue, private placement.”

The third resolution authorised the directors to take any action required to give effect to the resolutions, including but not limited to entering into agreements, undertakings, assignments, guarantees, arrangements or such other mechanisms with any party or parties in order to implement, finalise and give full effect to the aforesaid resolutions.

The Managing Director and Chief Executive Officer, Mr. Yemi Adeola, explained that the bank was raising a total of N32bn, having raised N12bn through rights issue.

According to him, after raising the N32bn, the bank will proceed to raise $200m Tier 2 capital.

He assured the shareholders that the bank’s Capital Adequacy Ratio and NPL ratio were all above the Central Bank of Nigeria threshold hence it had no problems with regard to the continued payment of dividend.

Furthermore, he said the additional capital of N20bn, will lift its capital from N60bn to N80bn.

This, he added, was set to hit N90bn at the end of the year and boost its CAR to 17 per cent.

Going forward, he said the bank’s goal was to be efficient and deliver returns to shareholders.

He added, “Overall, it make sense to have a strategic plan in sight, and our strategic plan is that in another five years, we will be among the top five banks in Nigeria in terms of size. But in terms of profitability we will continue to be top five even from now in terms of return on equity and return to our shareholders.”

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