Shareholders at a Court Ordered Meeting held in Lagos on Wednesday March 6, 2019 approved the scheme of external restructuring between Flour Mills of Nigeria Plc and Golden Fertilizer Company Limited.
The Scheme had prior to the shareholders’ endorsement, received preliminary approvals from the Securities and Exchange Commission (SEC).
Golden Fertilizer Company Limited is the fertilizer business of Flour Mills, unlike its other lines of business (example Sugar, Ports, etc.) does not exist as a stand-alone entity, and as such, it limits Flour Mills’ flexibility in raising funds as and when the need arises.
“Upon the Scheme coming into effect, the entire fertilizer business (fertilizer division) of Flour Mills, that is, the assets, liabilities and undertakings attached to the fertilizer business will be transferred to Golden Fertilizer Company Limited. Furthermore, the equity interests in the eligible subsidiaries owned by Flour Mills will be transferred to Golden Fertilizer”, said Paul Gbededo, chairman, Golden Fertilizer Company Limited.
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He said that “Golden Fertilizer will then continue the business of the fertilizer division of Flour Mills, as a wholly owned subsidiary, and the agro allied group, of Flour Mills”.
The board of directors of Flour Mills of Nigeria Plc considered the scheme of external restructuring as fair, reasonable, and in the best interest of the company, according to John George Coumantaros, chairman, Flour Mills of Nigeria Plc.
As part of the scheme of external restructuring, the board of Flour Mills Nigeria Plc engaged the services of FCMB Capital Markets Limited and KB & Company as financial adviser and solicitors respectively, to guide the company in the restructuring process.
The financial adviser to the scheme of external restructuring noted that the restructuring is in the need to improve operating efficiency and enhance shareholder value because of the expected improved profitability.
The restructuring enables each of the business value chains under Flour Mills Group to target appropriate investors and markets attracted to the specific businesses. It will also increase the capital allocation capacity and flexibility of the Flour Mills Group, as each business value chain will be able to attract new capital targeted at the specific opportunities of the respective businesses.
The external restructuring allows each business value chain to focus on its core market, and effectively grow market share. It also allows for uniformity and ease of comparison of each business value chain with competitors in their respective sectors. This enables a better understanding of the independent and related groups by analysts and investors, therefore ensuring better value ascribed to the businesses. The external restructuring enables shareholder value maximization because of a more effective and efficient utilization of resources.
Iheanyi Nwachukwu
