Neimeth to raise N5bn fresh capital
International Pharmaceuticals PLC have approved the plan of the Board to raise the sum of N5 billion through a hybrid offer of Rights to existing shareholders and private placement. The money will be used to finance major long term expansion projects.
The company will raise N3.67 billion through Rights Issue and N1.32 billion through private placement.
The sum of N3,679,618,625 will be raised by way of a Rights Issue at the discounted cost of N1.55k per 50 Kobo share. The company’s shares traded above N1.70 Kobo for most of the month of March 2022.
To achieve this the shareholders 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.
The shareholders also approved that the Company raise equity capital of N1,320,381,375.60 by way of a private placement at the premium price of N2.10 Kobo for 628,753,036 Ordinary Shares. The shareholders gave the approvals at the 63rd Annual General Meeting of the Company held in Lagos recently.
Dr. Ambrosie Orjiako Chairman of the Board said the money is being raised for three key reasons. First, is the construction of a World-class factory compliant to the World Health Organisation (WHO) current Standards of Good Manufacturing Practice (cGMP) at Amawbia in Anambra State.
Second is the completion of the ongoing facility upgrade at the Company’s Oregun factory and thirdly to boost working capital.
Managing Director/CEO, Pharm Matthew Azoji 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 long term projects with short term funds from banks. That will not be expedient and cost-effective. It will also not serve the best interest of shareholders.”
He explained that the company considered the prevailing economic situation in the country that also affect shareholders before deciding to add the private placement equity. “We did not want to put the entire burden of N5 billion on shareholders, that is why we have decided to add private placement to the fundraise,” he said.
Last year, the shareholders had approved a two-pronged expansion plan, namely the construction of a new plant in Anambra State which will be presented to the WHO for certification for current Standards of Good Manufacturing Practice (cGMP) as well as a facility upgrade of the Oregun plant. On completion, the Oregun plant alone will add an additional 300 per cent to the company’s production capacity. 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.
The fortunes of 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 profit of N166.4 million in 2018, N304.4 million in 2019, N297.3 million in 2020 at the upsurge of the COVID pandemic and N365.2 million in 2021.
Chairman of the Board of Neimeth, Dr. Ambrosie B. C. Orjiako said the Board is working with Management to ensure that the growth trajectory is not only sustained but also enhanced beyond what has been accomplished in last four years of consistent growth in turnover and profitability.
Neimeth has emerged from an era of constant losses to a period of steady growth in both turnover and profitability.
In the past three years, the company has built a regime of growth and profitability. In the 2018/2019 and 2019/2020 business years the company recorded growth in both turnover and profit after ten years of lull.
Following the same growth trajectory, the share price of Neimeth increased 343 per cent from 40 kobo as at September 30, 2019 to N1.77 as at 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 ability of the Company to create wealth for shareholders has been applauded by industry and market watchers and regulators. In 2019 Mr. Matthew Azoji, the MD/CEO was named among Nigeria’s top 25 CEOs on account of the wealth creation ability of the Company. And in 2021 the company was rewarded with the award of the Nigerian Investor Value Awards as the Best Performing Stock (Healthcare) in the Nigerian capital market on account of the value it created for shareholders through capital gains.
The NIVA Award celebrates public companies that have created sustainable value through strategic intelligence, operating efficiencies, market leadership and organizational values for investors. It celebrates the wealth-building capabilities of quoted companies in Nigeria.
Also in 2021 Neimeth was nominated along with Airtel West Africa Plc and FBN Holdings Plc for the Award of the listed company of the year. These were meant for companies that attained high-level earnings for investors in this case over 300 per cent.
The Company has equally transited from non-dividend payments which lasted for a decade to one of consistent payment of dividends to shareholders. In 2020 it applied its profits to restructure its balance sheet and returned to dividend payment in 2021.
In that year it paid a dividend of 6.5 Kobo for every 50 Kobo share and in 2022 this was increased by 8 per cent to give shareholders 7kobo for every 50 Kobo share held in the Company.
Shareholders expressed confidence in the capacity of the company to create wealth for them through capital gains and dividend payment.
