Neimeth International Pharmaceuticals Plc has concluded arrangements to commence its N3.67 billion right issue to the existing shareholders of the company in August.
The pharmaceutical company held a Completion Board Meeting to float a Rights Issue of N3.67 billion through the Nigerian capital market.
The Rights Issue which will commence on August 3, 2022, will be used to raise the sum of N3,679,618,625 at the cost of N1.55k per 50 Kobo share
The shareholders of the company had in March 2022 at the 63rd Annual General Meeting (AGM) approved the creation of 2,373,947,500 additional Ordinary Shares which will be allotted at the rate of five new shares for every four shares currently held in the company.
Dr. Ambrosie Orjiako Chairman of the Board said the money is being raised to construct a new multi-products facility that will be tailored to comply with the World Health Organisation (WHO) current standards of Good Manufacturing Practice (GMP) at Amawbia in Anambra State.
He noted that it will also be used to support the company’s strategic plan of maintaining a sustainable capital structure, leveraging the company’s balance sheet, reducing the cost of borrowing or finance costs, and funding working capital. Pharm Matthew Azoji, Managing Director/CEO said the capital market is the most viable and cheaper option to source long-term funds because of the high cost of funds through other sources.
“We cannot finance such long-term project as the new plant in Amawbia with short-term funds from banks.
“That will not be expedient and cost-effective.
“Orjiako said these projects will not only sustain the current upbeat performance of the company but will give her a quantum leap into the league of leading global health care commodities producers.”
Neimeth has taken an upward turn since 2018 when it returned to profitability after nearly a decade of predominantly losses. From a loss of N404.9 million in 2017 the Company made a profit of N166.4 million in 2018, N304.4 million in 2019, and N297.3 million in 2020 at the upsurge of COVID pandemic and N365.2 million in 2021,” he said.
Orjiako said the Board is working with Management to ensure that the growth trajectory is sustained.
Last year, the shareholders approved a two-pronged expansion plan, namely the construction of a new plant in Anambra State and a facility upgrade of the Oregun plant.
The Oregun factory upgrade is already close to completion with funds from the Bank of Industry (BOI) and its own resources. On completion, the Oregun plant alone will add an additional 300 per cent to the company’s production capacity.
Following the growth trajectory, the share price of Neimeth increased 343 per cent from 40 kobo as of September 30, 2019, to N1.77 as of March 14, 2022.
Between 2012 and 2021 the Earnings Per Share of Neimeth grew 280 per cent from negative 5kobo to 14 kobo per share.The right issue could also be a reason for the rise in share price.