Shareholders of Flour Mills Plc (FMN), Wednesday, approved directors’ proposal to embark on a restructuring exercise that would enable it merge five of its subsidiaries with its holding company, under a Scheme of External Restructuring.
The shareholders at a court-ordered meeting, in Lagos, also urged the board to ensure the exercise is done in way that will lead to higher profit and additional value to the entire group.
Among the proposals endorsed at the meeting, are: “That all the assets, liabilities and undertakings of the fertilizer business of Flour Mills, including but not limited to real property, equipment and machinery, plant, fixtures and fittings, motor vehicles, businesses, intellectual property rights, licenses, permits, credits and allowances be transferred to Golden Fertilizer.
“That all legal proceedings, claims and litigation matters pertaining to the fertilizer business of Flour Mills either pending or contemplated by or against Flour Mills be continued by or against Golden Fertilizer after the Scheme is sanctioned by the Court.”
Speaking on behalf of shareholders, the National Coordinator, Independent Shareholders Association of Nigeria, ISAN, Adebisi Adeniyi, said: “We commend the Board and Management for the restructuring exercise, as we hope it will lead to higher profitability. We also hope it will not affect the existing employees and shareholding structure.”
The Chairman, Golden Fertilizer Company Limited, Paul Miyonmide Gbededo, commended the shareholders for the understanding and support, while assuring them of maximum return on their investment.He said the principal reason for the restructuring is the need to streamline operations, reduce administrative costs, improve operating efficiency, and derive full benefits of synergy in line with the Company’s long term strategic thrust.
“The enlarged FMN, upon completion of the restructuring would be able to eliminate transfer costs of materials, and operate at a higher level of efficiency, which will drive down costs, make product pricing more competitive, improve profitability and enhance the bottom line for the benefit of all stakeholders,” Gbededo said.
While commenting on the benefits of the restructuring, he said: “It will enable each of the value chain in FMN Group to target appropriate investors and markets attracted to the specific businesses. It will increase the capital allocation capacity and flexibility of the Flour Mills Group, as each group will be able to attract new capital targeted at the specific opportunities of the respective businesses.
“The restructuring process will allow each group to focus on its core market, and effectively grow market share; it will create the platform to potentially unlock value, and increase synergy within the group and improve efficiency.”He added that the restructuring will allow for uniformity and ease of comparison with competitors’ respective sectors, which would ultimately lead to a better understanding of the independent and related groups by analysts and investors, thereby ensuring better value ascribed to the businesses.