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Published On: Sun, Mar 2nd, 2014

Cadbury returns N11.9bn excess capital to shareholders

CadburyStories by Ngozi Onyeakusi, Lagos

Following the approval of its shareholders at its Extra Ordinary General meeting held in December last year, Cadbury Nigeria Plc said it has returned excess capital of N11.6 billion to shareholders even as it assured investors of strong innovation known how and business strategies aimed at enhancing the growth of the company.

According to the company returning the excess capital to shareholders became necessary instead of investing shareholders’ funds on investments that may yield returns to them.

Capital reduction simply entails reduction of the company’s share capital and share premium and return of this reduced capital to the company’s shareholders.

Two out of every ordinary share held by company’s shareholders were cancelled and the nominal values of these shares thus cancelled were reduced from share capital and returned to shareholders.

This means that two out every five share held by Cadbury shareholder were cancelled and the shareholder will now retain only remaining three.

Where applying the cancellation ratio resulted in fractional shares, those fractional shares will be cancelled and the shareholder receives the value based on the listed price of the company on the Nigeria Stock Exchange.

Speaking during the company’s presentation of Fact Behind the Capital Reduction to brokers at the Nigeria Stock Exchange (NSE), the Cadbury Financial and Business Director, West Africa, Yinka Adeboye stated that all other options like keeping the money in the bank, investing in machines/equipment, dividend payout, share buyback among was found not suitable for improving returns on investment, thus the capital reduction.

Dividends payout she said cannot go because of tax implications and likewise investing in machines adding that the company had in the years back invested a whooping over $100 million in machines but not much returns was made from it.

Now, doing the right thing on what we were asked to do, we decided that the right thing is not sitting on the excess money and buying equipment for buying sake and we think that the right thing is to return back to shareholders the excess money”, he explained.

Also speaking at the event, the Managing Director, Cadbury (Weat Africa), Emil Moskofian assured investors that Cadbury has renowned innovative drive and strategies that will promote growth of the company and enhance profitability on investment made by shareholders into the company.

 

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