Ikeja Hotel has informed the capital market that the company will place 1.13 billion shares on sale to raise funds, a corporate document sent to the Nigerian Exchange Limited (NGX) has revealed.
The shares, estimated at a value of over N3.54 billion based on Tuesday’s closing price, will be sold to existing shareholders through Rights Issue, Prime Business Africa gathered from the statement released on Wednesday.
Ikeja Hotel selling stake amid declining revenue
The company’s decision to sell a 40.9 per cent stake in the firm (when pegged to the shares outstanding) comes amid declining revenue.
Ikeja Hotel’s turnover dropped by 34 per cent between January to June 2023 to N4.56 billion, failing to surpass the N6.89 billion revenue generated in the same period in 2022.
Although the firm was able to save its net profit through a combined 38.12 per cent reduction in Cost of Sales, Sales and Distribution Expenses and Administrative and General Expenses.
The cost of sales and other expenses dropped to N3.83 billion in the first half of this year, well below the N6.19 billion spent in H1 last year.
Note that this followed a drastic reduction in Ikeja Hotel‘s workforce. In 2022, Ikeja Hotel cut down its workers to 201 from 412 the previous year, Prime Business Africa gathers.
The drop in costs and expenses offset the revenue dip in net profit, which rose to N397.54 million in the first six months of 2023, in contrast to the N120.47 million profit after tax posted last year’s first half.
Who can buy Ikeja Hotel’s shares?
Ikeja Hotel said shareholders qualified for the hospitality business’ Rights Issue are individual or institutional investors on the Register of Members as of 13 December 2022.
In the statement released on Wednesday, Ikeja Hotel didn’t reveal the price the shares will be sold but stated that the board of directors will make a decision on the rate.
The company further stated that the Rights Issue to existing shareholders will be based on six new ordinary shares for every 11 ordinary shares held in Ikeja Hotel.
“That additional capital be raised by the issuance of 1,133,888,945 units of unissued shares of the company as a rights issue at the rate to be determined by the board of directors to existing shareholders based on 6 (six) new ordinary shares for every 11 (eleven) ordinary shares held in the company to members on the register of members as at December 13, 2022, based on the 2022 audited accounts of the Company,” the firm wrote.
Ikeja Hotel offers bonuses and dividends to keep shareholders
Ikeja Hotel also intends to Issue bonus shares to existing shareholders that have their names on the company’s Register of Members as of 4 July 2023.
The firm will distribute 692.93 million bonus shares, valued at N346.46 million. Ikeja Hotel said the payment for the bonus shares will be deducted from the retained earnings in the 2022 audited accounts.
Each shareholder will be issued one share for every three shares held in Ikeja Hotel, “That pursuant to Articles 6 & 48 of the Company’s Articles of Association, and the directors have so recommended, the Shareholders hereby approve the issue of a bonus issue of 1 (one) share for every 3 (three) shares held in the Company amounting to 692,932,133 units at 50k each at a total cost of N346,466,066.5 to members on the Register of Members as at July 4, 2023, to be set off from the Company’s retained earnings in the 2022 audited accounts of the Company,” the firm noted in the statement.
Meanwhile, Ikeja Hotel shareholders also approved N155,90 million as dividends.
Credibility and transparency is our DNA at Prime Business Africa’. We strongly believe in the role of media as a watchdog of the society that powerfully promotes accountability and transparency in government.
By contributing to Prime Business Africa, you are helping to sustain good journalism and making sure that it remains free to all.
Support Investigative Journalism and Mentorship
Courageous Journalism of Truth,Transparency and Development is in the DNA of Prime Business Africa; By donating as little as N1000 or $1 today, you are helping to keep credible journalism and life-changing information free for all.