Notwithstanding the euphoria that greeted the announcement that Dangote Cement will begin a buyback of the company’s shares next week to boost shareholder value, a lot of media reporting about the offer from Bloomberg to BusinessDay South Africa got it wrong by claiming the buyback will be Nigeria’s first.
Dangote Cement said in a filing to the Nigerian Stock Exchange on Monday it will repurchase as much as 10 percent of the issued capital starting with a first tranche of 85.2 million shares of 50 kobo each, or 0.5 percent of the total in issue.
The first share buyback scheme in Nigeria’s history was however completed some 10 years ago by Custodian and Allied Insurance, according to data compiled by MoneyCentral.
At the 14th annual general meeting (AGM) of the shareholders of Custodian and Allied Insurance held on the 16 June, 2009, a special resolution was approved that the company should buy back part of its shares up to 15 percent of the company shares in issue, in accordance with the rules as set out in the Companies and Allied Matter Act (CAMA), CAP C20, LFN 2004 section 160 and 105 to 110.
The transaction was approved by the Securities and Exchange Commission (SEC) via its letter dated 7 October, 2009.
Following the fulfillment of all regulatory requirements, the share buyback programme approved at the 14th Annual General Meeting was concluded in 2010.
At the expiration of the approval which lapsed on June 16th 2010, management carried out the transaction on the floor of the Nigerian Stock Exchange at an average market price of N3.95 for a total 37,924,787 number of shares. which translated to a reduction in the issued and paid up share capital from N2,569,385,797 to N2,550,423,404.
The Federal High Court of Nigeria located at Ikoyi, Lagos sanctioned the share capital reduction based on the number of shares purchased. The nominal value of the shares was charged against the brought forward retained earnings of the Company in line with the rules and regulations of the SEC Rule 109 B (3) as amended.
ChapelHill Denham and Meristem Securities were the lead investment houses on the Custodian transaction a decade ago.
Dangote Cement shares are up by 16 percent to N245 per share, since news of the buyback broke on Tuesday, its biggest advance in five months.