Neimeth International Pharmaceuticals Plc is currently in the market for Rights Issue to raise about N3.67billion from its existing shareholders.
The Rights Issue
The pharmaceutical company is offering to its existing shareholders 2,373,947,500 ordinary shares of 50 kobo each at N1.55kobo per share on the basis of five (5) new ordinary shares for every four (4) ordinary shares held as at April 22, 2022.
The shares being issued will qualify for any dividend (or any other distribution) declared for the financial year ending 2022, as long as the qualification date for the dividend (or any other distribution declared is after the allotment of the ordinary shares being issued.
The acceptance list for the shares now being issued since Wednesday August 3, 2022 closes on Thursday August 25, 2022. The Lead Issuing House for the Rights Issue is PAC Capital Limited while the Joint Issuing House(s) are Mega Capital Financial Services Limited and Planet Capital Limited.
Use of the Rights proceeds
The proceeds of this Rights Issue will be used for Neimeth’s business expansion plans which includes the construction of a new multi-product plant that meets the World Health Organisation (WHO) current standards of Good Manufacturing Practices (cGMP) at Amawbia, Anambra State and the enhancement of working capital.
Impact of Rights Issues market capitalisation
The Market Capitalisation of Neimeth at Rights Issue price (pre-issue) is N2.943billion; while its Market Capitalisation at Rights Issue price (post-issue) will be N6.623billion (assuming all provisionally allotted shares are fully taken up on completion of the Rights Issue).
The Rights Issue is underwritten on a standby basis by the lead issuing house
As stated in the Rights Circular, shares that are not taken up by August 25, 2022 will be allotted on a pro-rata (equal) basis to shareholders who applied and paid for additional shares over and above their provisional allotment. Accordingly, the shareholders who do not accept their allotment in full may have their shareholding in the Company diluted. The Issue is underwritten on a standby basis by PAC Capital Limited. Neimeth’s entire issued and paid-up capital is listed on the Nigerian Exchange Limited (NGX). The new shares being offered will also be quoted on the NGX.
An application has been made to the council of the Exchange for the admission of the Shares to its daily official list, according to the Rights Circular, which is issued in accordance with the Rules and Regulations of the Securities and Exchange Commission (SEC) in respect of the Rights Issue exercise.
As at April 14, 2022, Neimeth International Pharmaceuticals Plc had debt facility of N3.950billion on its books which include: N500million Term Loan and N250million Working Capital Loan obtained from the Bank of Industry; N2billion Term Loan and N400million Working Capital Facility accessed under CBN RSSF-DCRR (Real Sector Support Facility -Differentiated Cash Reserves Requirement); N300million and N200million Import Finance Facilities obtained from two (2) commercial banks; and N200million and N100million Overdraft Facilities obtained from two (2) commercial banks. Aside as disclosed above, Neimeth has no outstanding loans, debentures, mortgages, charges, or similar indebtedness or material contingent liabilities other than in the ordinary course of business.
Claims and litigation
As at April 14, 2022, Neimeth International Pharmaceuticals Plc in its ordinary course of business, is presently involved in five (5) cases. Neimeth was directly involved in the transactions leading to four (4) of the suits and are thus necessary parties to the actions. Whereas, in the fifth suit, Neimeth was tangentially involved in the facts leading to the suit and was joined as a party to the suit in order to be bound by the judgement of the Court. The sum total of claims against Neimeth in the suits amounts to circa N222.807million. “The Solicitors to the Issue are of the opinion that the monetary sums involved in the aforementioned cases are not likely to have any material adverse effect on the Rights Issue,” it noted in the Rights Circular.