Capital Market

Resurgent Transcorp launches bid for fresh capital




In a move designed to recapitalize the firm for greater capacity and delivery, Transcorp Hotels Plc has presently proposed a Rights Issue of 2,659,574,468 (Two Billion, Six Hundred and Fifty-Nine Million, Five Hundred and Seventy-Four Thousand, Four Hundred and Sixty-Eight).

The Rights Issue has opened for subscription and is therefore now officially underway. The company is offering the rights in the form of ordinary shares at 50kobo at N3.76 per share each.

A notice from the registrars to the company, Africa Prudential Plc outlines that the offer is open to shareholders (and other interested investors).

Plans to embark on the current offer had begun to trickle into the public domain following a Market Bulletin released on 14 July 2020, with reference number: NSE/RD/LRD/MB35/20/07/14.

According to further details that BH has since gleaned, the Rights Issue is being traded on the basis of Seven (7) new ordinary shares for every Twenty (20) ordinary shares held by existing shareholders as at 13 July 2020.

Asked to respond as to how he thinks the Transcorp rights issue would fare in the market arena, more so when the nation and business community were presently grappling with the larger constraints related to unsteady oil prices, COVID-19, recessionary headwinds and the current #EndSARS protests, the business analyst Sam Eke said that there was actually not too much to worry about.

‘Transcorp has narrow ‘free float’ meaning most of the stocks are held closely by a few investors. The Rights Issue’s success will depend less on the obviously inauspicious business environment and more a matter of the strategic business intent of the majority investors.

Indeed, it can be said that in this case what is playing out is that the majority investors are simply complying with SEC and NSE rules for raising fresh capital from existing shareholders.’

And of a truth, this may very well be what is playing out at the moment given that Transcorp, has already in line with extant regulatory conditions, dutifully submitted its application for the approval and listing of the rights issue and also secured the required shareholders’ approval to raise the sum in question through the rights issue.

Significantly, the exercise is coming on the heels of two other developments in Transcorp in recent time. First was the appointment of Mrs. Foluke Abdulrazaq as Vice Chairman and the second had to do with its declaring a N957m total comprehensive loss in Q1 2020.

It will also be recalled that even before the current period, Transcorp had declared a Profit After Tax, PAT of N3.7bn in its 2019 Audited Results.

Analysts reason that at the conclusion of the current offer process then, Transcorp would be standing on firmer ground to better prosecute its goals and profitability aspirations.

Underscoring the length of time and volume of work that has gone into the offer process, it is to be noted that shareholders of the company had approved the request from management to embark on the rights issue at an extra-ordinary general meeting (EGM) that was held in Lagos, which then opened the door for its agents to formally apply to the regulators for leave to proceed with the rights issue.

Accepting the challenge, the Chairman of Transcorp Hotels Plc, Mr. Emmanuel Nnorom said: ‘”This approval and endorsement of shareholders empowers the Board and management to look to the future with confidence despite the current harsh operating environment.”

Equally upbeat about the continuing viability of the brand, Managing Director/CEO of Transcorp Hotels Plc, Mrs. Dupe Olusola, said: “Our track record of excellent service delivery has positioned us as the first choice for international and local guests alike noting, we are not resting on our oars but working round the clock to innovate new products and services to further delight our guests, notable of such is the launch of asset-light strategies to deepen our hospitality footprints across Africa.”


Olusola would also not be deterred by the threat posed by the COVID-19 pandemic, which has seen the hospitality industry as being one of the hardest hit:

“We are optimistic about a great recovery for the sector and your approval today shows that you also share in this mindset. We will continue to play our part in ensuring a significant recovery to the Nigerian hospitality industry,” she had remarked.

Internally however, the management has been taking steps to ensure business continuity.

This has included the diversification of its portfolio and reduction of its workforce, among other cost management initiatives.

“We activated various cost-saving initiatives such as renegotiations of service contracts and restructuring of our loans… Despite undertaking these, it has become apparent that more fundamental changes need to be made for the business to survive,” Olusola said.

Incorporated on November 16, 2004, the umbrella Transnational Corporation of Nigeria Plc is a leading diversified conglomerate focused on acquiring and managing strategic businesses that create long term shareholder value and socio- economic impact.

It has investments in strategic sectors of the Nigerian economy such as Power, Hospitality and Oil & Gas.

While the Hotels chain boasts of decades of experience in luxury hospitality, the Oil and Gas forays are focused on the Upstream sector of the petrochemical complex. On its own part, the Power investments presently revolve around four power stations from where power is produced and wheeled to the national grid.

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