National Bank of Kenya (NBK) shareholders have given the greenlight to its board in a major step towards the lender’s takeover by Kenya Commercial Bank (KCB).
During an annual general meeting on June 14, the bank’s shareholders resolved to conditionally convert the firm’s preference shares into ordinary shares pending the takeover by KCB or in the event of any competing offer.
The resolution, discussed as special business, will now see the issued ordinary share capital of NBK increase to 1.4 billion shares that could potentially be listed on the Nairobi Securities Exchange.
The move now paves the way for the KCB takeover of NBK to roll on.
At the AGM, the finer details of the takeover were not discussed as the board indicated that regulatory approval on an important document was still pending.
“We will not discuss the details at this meeting as KCB has given the CMA (Capital Markets Authority) the final takeover document for approval,” said NBK Company Secretary Habil Waswani told shareholders.
According to the NBK Board, the final takeover document must receive approval from CMA before it is forwarded to the lender to consider.
In NBK’s potential calendar of events, the requisite approval from CMA is expected to be given by July 5.
“Once the NBK Board receives the final approved takeover document from CMA, we will send a circular to all shareholders,” said NBK Chair Mohamed Hassan.
In the circular, supposedly to be sent by July 30 to shareholders, the NBK Board will include its own recommendation, an independent adviser’s opinion (Standard Investment Bank) as well as that of the Central Bank of Kenya (CBK).
“We will advise you as to whether it’s a good or bad deal. If the value is x and KCb has offered y, it won’t matter. You will choose. The transaction will only close if you want it to,” he added.
The shareholders will have to have given approval for the takeover by August 19.
According to the NBK Board, the approved conditional conversion of shares is set to see all shares rank as the same, with directors intimating to shareholders that the move is beneficial to investors.
Currently, the firm’s preference shareholders receive 6% interest on dividends before ordinary shareholders are paid.
“We’re asking you to remove that right they have over you,” Hassan told shareholders during deliberations over the resolution.
The re-designation of preference shares approval means that in the event of the completion of the KCB takeover, this benefit will cease to exist.
In the change, a total of 1.2 billion non-cumulative preference shares of the firm will be converted into ordinary shares of Ksh5 each.
Of this, the firm’s two highest shareholders, the National Treasury and the National Social Security Fund (NSSF) hold 1.1 billion shares.
Treasury holds 900 million preference shares while NSSF’s is at 235 million, according to a circular sent to NBK shareholders prior to the AGM.
Currently, NBK’s authorised ordinary share capital stands at Ksh13 billion, divided into 2.6 billion shares of Ksh5 each.
The 2.6 billion shares is divided into 1.4 billion ordinary shares (of which 338,781,200 ordinary shares are listed on the NSE) and 1.2 billion shares (of which Treasury and NSSF hold 1,135,000,000 shares).
Redesignating of the preference shares held by Treasury and NSSF thus potentially raises NBK’s listed shares to 1,473,781,200, as a result of adding the 338,781,200 shares with the redesignated shares.
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