UACN Property Development Company Plc is seeking the approval of its shareholders to enter into loan agreement with its majority shareholders, Custodian Investment Plc and UAC of Nigeria Plc to discharge its outstanding debt obligations.
UPDC, which used to be a subsidiary of UAC of Nigeria Plc became a subsidiary of Custodian Investment Plc when the investment firm acquired 51 per cent stake last November.
The company was recording losses in recent time until it strengthened its capital structure with completion of the N16 billion rights issue, leading to an 80 per cent reduction its debt from N21 billion to N6 billion.
However, in order to discharge its outstanding debt obligations, the board of UPDC is requesting that the shareholders approve that the firm be allowed to enter into a loan agreement with its majority shareholders.
In a special resolution being put before the shareholders at its forthcoming annual general meeting(AGM), the directors have proposed: “That the company be and is hereby authorised to enter into a shareholder loan agreement with Custodian Investment Plc and UAC of Nigeria Plc for the provision of a shareholder loan required by the company for the discharge of its outstanding debt obligations; that in furtherance of the foregoing resolution, the company be and is hereby authorised to create a charge over such asset(s) of the company as the directors may determine, in favour of the majority shareholders as security for the shareholder loan.”
The directors are also seeking the authorisation to raise additional capital via the issue of debt instruments, preference shares or ordinary shares or a combination of any of these options whether by way of private placements, rights to existing shareholders or offer for subscription at a quantum and price upon such other terms and conditions to be determined at the discretion of the directors and subject to any requisite regulatory approvals.
“That the directors be and are hereby authorised to do all such acts as the board may deem necessary or incidental to effect the above resolutions, including without limitation, entering into the necessary agreements and complying with directives of any regulatory authority,” the directors said.
UPDC recorded a revenue of N1.662 billion for the year ended December 31, 2020, down from N2.157 billion and reduced its loss from N15.883 billion to N439 million.