Shareholders of Law Union and Rock Insurance Plc, have accepted an offer of N1.23 per share for every 50 kobo ordinary share they held from the new owner of the company, Verod Capital Management.
The board of Law Union and Rock secured the exit payment from its new investor in the quest to get full value for the investment of shareholders of the company, at the court ordered AGM in Lagos.
Basically, the offer was secured from Verod Capital to purchase the entire issued share capital of the company to which the company signed a Transaction Implementation Agreement (“TIA’) with Verod, through its investment vehicle, Kanuri LUR limited, which sets out the broad framework for the acquisition of the entire issued capital of the company by Kanuri LUR.
The development is due to the mandatory regulation by the National Insurance Commission (NAICOM), increasing the minimum paid up share capital of all insurance and reinsurance companies with a deadline of June 30, 2020. Based on this, the minimum paid up capital of Law Union and Rock was increased from N3 bn to N10 bn.
The TIA transaction is expected to involve the transfer of a total of 4,296,330,500 ordinary shares of 50 kobo each to Kanuri LUR or any other nominee of Kanuri LUR in consideration for a cash payment of N1.23 per share to the Scheme Shareholders.
With this done, Law Union will be re-registered as a private company limited by shares and thereafter, delisted from the Main Board of the Nigerian Stock Exchange (the NSE” or “Exchange”), and shares the of the company delisted from the Securities and Exchange Commission (“SEC”)
Chairman, Law Union and Rock Insurance, Mr Remi Babalola, during the combined meeting, stated that the company initially explored merger discussions with other insurance companies and communicated initial recapitalisation plan to NAICOM.
He however noted that the shareholders would not maximise shareholder value if such merger discussions crystallised, which led them to seek more optimal avenues for shareholders investments through acquisition by Verod, using the Kanuri LUR SPV.
The shareholder groups commended the board and management of Law Union and Rock Insurance on its performance and growth of the company, which made the company attractive to investors, also protecting the employees interests by hedging retrenchment.
The managing director, Law Union, Mr Ademayowa Adeduro, said the company has performed excellently since its acquisition by the consortium of investors (Alternative Capital Partners and Swanlux Solutions and Services Limited in 2012), who embarked on a transformation and restructuring process that has enabled the Company align its offerings to the unique needs of the various sectors of the economy.
Thereafter, he said the company turned from a loss-making position of Nl.3 bn in the financial year end 2012 to profitability of N250m in the following year and this has grown to N860m in 2019.
“The shareholders’ fund has also significantly improved over the same period growing from N3.5 bn in 2012 to N7.2 bn in 2019. With respect to the financial performance for 2019, Gross Premium Written rose by 6 per cent from N4.54 bn achieved in 2018 to N4.83 bn. The Net benefit and claims declined astronomically by 20 per cent, to Nl.28 bn from Nl.6 bn posted in 2018.
“Underwriting profit increased significantly by 54 per cent, to N0.98 bn from N0.64 bn posted in the preceding year. Based on the decline in net benefits and claims and significant increase in underwriting profit, the company’s profit before tax increased significantly by 91 per cent, to N0.94 bn from N0.5 bn recorded in 2018”, he said.
Finally, with the success of the AGM and Court Ordered Meeting, it is simply a matter of weeks for Law Union to complete its recapitalisation scheme.