*Disquiet Over Resumption Of Trades On Shares
Fresh moves by BUA Group to Breathe life and succour into the embattled Union Dicon Salt Plc are causing anxiety in the market as some stakeholders, particularly, shareholders are crying foul, alleging marginalisation in the alleged deal.
But most intriguing is the resumption of trade in the shares of the company that have been experiencing lull for quite some years.
Metrobusinessnews.com (MBN) gathered that since this week, over 50,000 shares of the company may been traded on, which is far and above total trade last year at the nation’s capital market, fueling speculations that the deal may have been sealed.
For instance, on Monday, January 27, the company’s market capitalisation, in millions, was 2050.44 at N7.50 per share, with almost same trade on Tuesday at 2050.04 at same price.
The company, which originally operates as a crude salt processing firm, also engages in the wholesale and distribution of refined and iodised edible salt, has over the years, gone into strategic survival options, including diversification, alliances, but it’s yet to find its bearing.
MBN gathered that the latest takeover bid by BUA Group, coupled with resumption of trades in its shares are causing some disquiet among shareholders and investing public.
The development is coming after the first attempt by the same company over a decade and half ago and another botched alliance attempt with a Tanzanian company.
“We must stop the takeover of Union Dicon Salt。
All shareholders should be trreated fairly, and equally。
TY Danjuma and BUA
cannot be allowed to complete this takeover without paying a fairprice to shareholders。
BUA payment must come to ALL shareholders。
please assist minority shareholders,” a message sent to MBN from one of the shareholders.
Boniface Okezie, National Coordinator, Progressive Shareholders Association of Nigeria (PSAN), said he is not aware, although he sees it as a welcome development, should it be true.
In his response to MBN’s inquiry, Okezie said, ” I know nothing about it, but if it’s a true story, it is a welcome development, it will add value to BuA group. Instead of buying them it should be by exchange of shares of union diacon to earn shares of BUA, my take.”
But the managing director of the company, Florence Iroye would not respond to inquiries on the recent development in the company, as she is uet to respond to an inquiry sent to her over one week ago.
Background Story
The first attemp by BUA Group to acqire the ailing UnionDicon Salt was in 2010
Before then, the company had for several years owed salaries and allowances of its workers as the company’s machines were almost at rest then.
But the workers were persistent and hanging, trying to secure the facilities for possible turnaround or acquisition, with occasional revving the machines, most of which were installed in 1985 when the company began production as the nation’s first packager of iodized salt.
Half -Year Financial
Further investigations showed that the company recorded a 69 decline in its after-tax profit for the first half of 2024.
According to the firm’s financial statements, its profit dropped to N36.73 million in H1 from N118.05 million in the first half of 2023.
Its other operating income dipped to N123.08 million from N187.3 million during the period under review. The firm’s administrative expenses surged to N86.4 million from N69.3 million.
Cash generated from operations stood at a negative N33.9 million from N86.99 million. Cash and cash equivalents at the end of the quarter dropped to N29.6 million from N53.6 million.
The company, which is also said to be involved in the sale of packaged water in sachets and plastic bottles has negative equity of -N1.2 billion in 2023 from -N1.5 billion as of December 2022 which implied that the company had accumulated more debt than it could pay, even after liquidating all of its assets.
After accumulating losses over the years, Union Dicon’s revenue reserves were negative N1.6 billion.
“As part of the measures to sustain the going concern, the Company has entered into a joint venture arrangement with Joatalim Logistic Limited,” Union Dicon Salt said in a statement.
It stated that this arrangement currently fetches the sum of N230 million annually to sustain the administrative and other overhead costs.
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The company believes that it will continue to operate for the foreseeable future.
“Proper attention is focused on the impact of the negative working capital and net liabilities respectively,” the firm stated.
The firm noted that to facilitate this, the management is committed to engaging in productive activities then with the approval of the board to revive salt production and diversify into other business opportunities.
“As part of the measures to sustain the going concern, the amount due to the related parties will not be required for immediate repayment until the Company returns to a profitable position,” it said.
The company provided its latest efforts at coming back to full operations while saying, “The company is currently experiencing difficulty in maintaining a positive working capital position and has not been generating income from its core business since 2005.”
In 2014, T. Y. Danjuma, the chairman of the company, said the firm was embarking on a major diversification exercise by investing in the Agricultural and industrial goods sector of the economy.
Back in 2016, the Federal Ministry of Agriculture and Rural Development (FMARD) said it had agreed that Union Dicon Salt Plc will replace Cargill as the core investor in the $100m Alape Staple Crop Processing Zone in Kogi State. The deal appeared to have fallen through.
In November 2013, following approval by the Board of Directors, and an AGM of the company, Union Dicon Salt, entered into a strategic agreement with CBO Capital, as a core investor in the company.
In two phases, CBO Capital would acquire 41 million shares of Union Dicon Salt, and following completion of this, an additional 240 million shares to recapitalise the company.
But, after few years of the agreement CBO was said to have opted out .
The company was founded on May 7, 1993.
