NIGERIA | FMCG |FLOURMILL

Flash Note: Flourmill bids farewell to the Exchange After 45 Years

Yesterday, 30 December 2024, the Nigerian Exchange Limited (NGX), through its Head of Issuer Regulation Department, Godstime Iwenekhai, announced the delisting of Flour Mills of Nigeria Plc (Flourmill) from its Daily Official List. The delisting followed the approval of Flourmill's application to withdraw its entire issued share capital from the NGX. This decision stemmed from a court-ordered meeting held on 14 November 2024, where minority shareholders approved a proposal by the majority shareholder, Excelsior Shipping Company Limited (Excelsior), to acquire all outstanding minority shares. This transaction granted Excelsior full ownership of the company, facilitating Flourmill's transition to private ownership.

Background Story

On 24 September 2024, Flour Mills of Nigeria Plc (Flourmill) informed the Nigerian Exchange Limited (NGX) and other stakeholders about an offer from its majority shareholder, Excelsior Shipping Company Limited (Excelsior), to acquire all outstanding shares held by minority shareholders. The transaction was structured as a Scheme of Arrangement between Flourmill and the minority shareholders, with a court-ordered meeting scheduled for Thursday, November 14, 2024. At this meeting, minority shareholders were to decide whether to approve Excelsior's proposal to acquire all shares not already owned by them.

The Scheme required the approval of at least 75% of the minority shareholders present at the meeting, as well as the sanctioning of the Federal High Court. Once approved, Flourmill would be delisted from the NGX and transition into a private company. The initial buy-out price was proposed at ₦70.00 per share for 1,503,080,716 ordinary shares of 50 Kobo each, representing 36.66% of the company's issued and paid-up share capital that was not owned by Excelsior.

At the court-ordered meeting on 14 November 2024, minority shareholders approved the Scheme through a special resolution. The final buy-out price was agreed at ₦86.00/s. It was resolved that legal and beneficial ownership of the scheme shares, as defined in the scheme document, would transfer to Excelsior Shipping Company Limited and its wholly owned Nigerian subsidiary, Greywise Investment Solutions Limited (Greywise), upon completion of all regulatory procedures outlined in the Scheme. Following the Scheme's implementation, the post-transaction shareholding of Flourmill is structured as follows: Excelsior holds 2,952,284,836 units (72.00%), while Greywise owns 1,148,110,770 units (28.00%).

Going Forward

The delisting of Flour Mills of Nigeria Plc (Flourmill) from the Daily Official List of the Nigerian Exchange Limited (NGX) on 30 December 2024, followed the payout of the scheme consideration to shareholders on 19 December 2024, after the suspension of trading in the company's securities on the NGX, from 16 December 2024. According to the Scheme of Arrangement document released on 23 September 2024, measures were established to ensure flexibility in paying the scheme consideration to shareholders who do not claim their entitlement early. A Scheme Consideration Account will remain active for two years from the effective date"”defined as the date the Certified True Copy (CTC) of the court sanction is delivered to the Corporate Affairs Commission (CAC) for registration, in line with Section 715(4) of the Companies and Allied Matters Act (CAMA). During this period, untraceable shareholders can claim their entitled scheme consideration. After the two-year period, the Scheme Consideration Account will cease operation. Any remaining funds will be transferred to the National Investors Protection Fund under the custody of the Securities and Exchange Commission (SEC), as directed by the SEC. Any portion of the scheme consideration not claimed within six months of the effective date will be deemed unclaimed. Shareholders whose whereabouts cannot be determined within 18 months of the consideration becoming unclaimed (a total of two years from the effective date) or who fail to claim their entitlement will be classified as untraceable.

Notably, the scheme does not provide specific arrangements for dissenting shareholders who voted against the proposal during the court-ordered meeting. Such shareholders are deemed to have accepted the terms under which Excelsior Shipping Company Limited (Excelsior) and its subsidiary, Greywise Investment Solutions, acquire the shares of accepting shareholders. Under Section 715 of CAMA, once the statutory majority of shareholders votes in favour of the scheme, it becomes binding on all shareholders and Flourmill. Each shareholder will receive their scheme consideration on a pro-rata basis, reflecting their respective holdings in the company.

Flourmill; What does the future hold?

Flourmill has continued to drive sales by leveraging its broad product portfolio across the fast-moving consumer goods (FMCG) sector, in addition to optimizing operations in its support services segment, including freight/logistics and distribution. Recently, the company spun off its packaging solutions and manufacturing division, Nigeria Bag Manufacturing Company (BAGCO), establishing it as a separate legal entity under the name BAGCO Industrial Solutions Limited. This strategic move is expected to allow Flourmill to focus more effectively on its other core operating divisions, while providing a dedicated management team to lead the 42-year-old division in the dynamic packaging sector.

Following the delisting and transition to a private entity, Flourmill plans to undergo a comprehensive business restructuring aimed at driving long-term growth. This restructuring could involve consolidating its 22 business units into five key companies, with a focus on strengthening operations in high-growth areas, particularly its sugar and food sectors. According to an interview with the company's Chairman, John Coumantaros, Flourmill intends to return to the market in the medium-to-long term after the restructuring, with plans to pursue a dual listing as a pan-African food or agro-allied business.

Based on the eventual delisting and subsequent transitioning of the company into a private entity, CSL Stockbrokers Limited Research hereby discontinues coverage of Flour Mills of Nigeria Plc (Flourmill).

Kindly click on the below link to download the full report."‹"‹"‹ï»¿"‹ï»¿"‹ï»¿"‹ï»¿"‹ï»¿"‹ï»¿"‹ï»¿"‹

"‹Flash-Note_Flourmill-bids-farewell-to-the-Exchange-After-45-Years.pdf"‹"‹"‹"‹"‹"‹"‹

Kind Regards,

Segun Tunmbi

Email: CSLResearch@fcmb.com"‹

Address: 44 MARINA, LAGOS ISLAND, "‹

Website: www.cslstockbrokers.com