BusinessDay 14 Dec 2017

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Thursday 14 December 2017 18 BUSINESS DAY C002D5556 I NVESTOR Helping you to build wealth & make wise decisions As Seven-Up seeks shareholder vote in $61.5mn takeover bid …stock market to lose N65bn if delisted IHEANYI NWACHUKWU Ni g e r i a ’ s Seven-Up Bottling Company Plc will hold a meeting of shareholders in January to approve a bid by majority investor Affelka to buy out minorities in a N19.33 billion ($61.5mn) takeover. Affelka, the investment firm of the Lebanese El- Khalil family, would not vote at the January 11 meeting which has been ordered by the court to decide on the buyout, the soft drinks bottler said in a note to shareholders. Vice Chairman Sunil Sawhney said last week that Seven-Up Bottling Company had received an offer from its majority shareholder after posting losses and the deal was to restructure the 7-Up, Pepsi and Mirinda distributor. Shares in Seven-Up Bottling Company gained Vetiva Research 5percent on Friday to N101.97. Privately-held Affelka offered to acquire the 26.8percent stake or 171.5million shares it did not already own at N112.70 per share. Seven-Up Bottling Company would be delisted from the Stock Exchange after the takeover, which is subject to shareholder and regulatory approvals, the vice chairman has said. The Company Seven-Up Bottling Company Plc is one of the largest manufacturing companies in Nigeria. The company produces and distributes some of consumers’ favourite brands of soft drinks: Pepsi, Mirinda, Seven Up and Mountain Dew. These brands are popular and widely consumed across the length and breadth of Nigeria. The company has nine bottling plants with state of the art manufacturing facilities located strategically across the country. Nigeria Fixed Income: Tentative steps towards monetary easing IHEANYI NWACHUKWU In a bid to tame inflation, the Central Bank of Nigeria (CBN) had conducted neardaily OMO auctions. However, the apex bank paused these liquidity mop ups on the 4th of December 2017. Following this, we have observed a significant improvement in system liquidity – average Interbank OBB of 8.9percent versus year average of 25.5percent. Consequently, strong buying sentiment in the T-bills space has induced a notable moderation in market yields. In all, average T-bill yields moderated 230bps weekon-week (w/w) between the 4th and 11th of December. In our view, the loosening of liquidity conditions is in line with apex bank guidance of imminent monetary easing in order to spur bank lending and stimulate economic growth. T-bill refinacing to spur Seven-Up Bottling Company market strategy is buoyed by a well-coordinated distribution network with an extensive network of over 200 distribution centers located across Nigeria. Nigeria as its success story …how their journey started It will be recalled that a Lebanese Mohammed El-khalil who came to Nigeria for the very first time in 1926 founded the company. further yield declines In the same vein, the Debt Management Office (DMO) has revealed that it would settle N198 billion of maturing T-bills in December, rather than rolling them over at primary market auctions as is the usual practice. This follows the plan to refinance $3 billion (N915 billion) worth of T-bills with Eurobonds to reduce the government’s borrowing costs. The N198 billion will be financed by a portion of the recent $3 billion Mohammed is the father of the company’s current chairman Faysal El-Khalil. The company metamorphosed from a very successful transport business [El-Khalil Transport] in a bid to diversify the then largest transport company in the entire West of Africa. On October 1st 1960, the exact day Nigeria won her independence; Nigerians also experienced the birth of a soft drink giant as the first bottle of 7Up rolled out Eurobond issue, with the rest allocated to capital expenditure for the 2017 Budget. Along with the temporary stoppage of liquidity mop ups, the decision to settle the maturing bills would be a liquidity boost to the fixed income market and should lead to more yield moderation in the short term. The DMO still plans to raise a $2.5 billion Eurobond for the remaining portion of T-bills to be refinanced from our factory located in Ijora. Since then, the company continued to grow in the leap and the bound. In the late 80s, Seven-Up established two more plants in Ibadan and Ikeja. In the early 1990s when Pepsi International took over 7Up international, the company again got great opportunities to introduce the Pepsi brand to the Nigeria people. As at today, Seven Up Bottling Company Plc has its Headquarters in Beirut and operational base in three African countries –Nigeria, Tanzania and Ghana. Delisting a negative impact on our market In a country that seeks big listing and thrives to boost its market value, the importance of having Seven Up Bottling Company Plc still listed on the Nigerian bourse cannot be overemphasised. It is also interesting to note that if approved by the capital market and we expect this to be concluded in early 2018 given that it has already received Senate approval. As such, we foresee further liquidity injections in the coming months, in line with the apex bank’s move to lower interest rates in the country. Given this, we believe that we have moved beyond the peak of the golden yield environment in Nigeria and expect a lower-yield environment in 2018. Whilst improved liquidity provides regulators, the share buyout which in future results to delisting of Seven Up Bottling Company Plc from the Nigerian Stock Exchange (NSE) will only lead to huge value erosion of about N65billion from the current market cap of the NSE. Seven-Up Bottling Company currently has outstanding shares of 640,590,363 units while its market capitalisation stood Tuesday at N65.320billion. The half-year scorecards In the half-year to September 30 2017, Seven Up Bottling Company Plc reported revenue of N53.3billion against N46.97billion in same period of 2016. The company’s gross profit stood at N8.49billion in the review period against N8.86billion in same period of 2016. Loss Before Taxation (LBT) widened to N6.25billion from a loss before tax of N1.95billion in halfyear 2016. breathing room in the market, we highlight the risk excess naira liquidity poses on currentlydowntrending inflation and a stable exchange rate. Amidst this, we do not think the CBN has relaxed its aggressive liquidity management position and anticipate a firmer grip on liquidity in the New Year, even as it looks towards a lower interest rate environment in the country. We foresee further yield moderation going forward.
Thursday 14 December 2017 C002D5556 BUSINESS DAY 19 Excellence in Public Service Awards Champions 2017 Public office holders including six ministers and 13 heads of federal parastatals on November 30, 2017, received BusinesDay 2017 Excellence in Public Service Awards for showing exceptional performance in public service. The Awards was staged by BusinessDay Conferences, an arm of BusinessDay Media Limited, publishers of BusinessDay and BD Sunday newspapers, as part of its leadership thought initiative and commitment to the development of the nation, to recognize, reward and celebrate some distinguished ministers, heads of departments and agencies for their selfless services to the nation. The awardees are Kayode Fayemi, minister of mines and steel development; Emmanuel Ibe Kachikwu, minister of state for petroleum resources; Audu Innocent Ogbeh, minister of agriculture and rural development; Enyinnaya Okechukwu Enelema, minister of industry, trade and investment; Babatunde Raji Fashola, minister of power, works and housing; and Adebayo Shittu, minister of communications technology. Godwin Emefiele, governor, Central Bank of Nigeria (CBN); Aliyu Abdulhameed, managing director, NIRSAL; Umaru Ibrahim, managing director, Nigeria Deposit Insurance Corporation (NDIC); Maikanti Baru, group managing director, Nigerian National Petroleum Corpoartion (NNPC); Yemi Kale, Statistician General of the Federation/CEO, National Bureau of Statistics; and Patience Oniha, Director General, Debt Management Office (DMO) bagged the awards for their exceptional performance. The awardees include Boboye Olayemi Oyeyemi, Corps Marshal, Federal Road Safety Corps (FRSC); Sharon Ikeazor, Executive secretary, The Pension Transitional Arrangement Directorate (PTAD); Mohammad Babandede, Comptroller-General, Nigeria Immigration Service (NIS); Yewande Sadiku, Nigerian Investment Promotion Commission (NIPC) and Uche Orji, managing director, Nigeria Sovereign Investment Authority (NSIA). The management and staff of the Nigerian Ports Authority (NPA), led by HadizaBala Usman, also won the excellence award.
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