NASD OTC Woos Ashaka Cement after Exiting NSE

Goddy Egene

The management of NASD Securities Exchange has started moves to get Ashaka Cement Plc listed on its platform barely one week after the cement manufacturing firm was delisted from the Nigerian Stock Exchange (NSE).

Ashaka Cement, which is a subsidiary of Lafarge Africa Plc, opted for voluntary delisting from the NSE and remains an unlisted company. However, NASD, which is the over the counter (OTC) platform for the trading of shares of unlisted public companies, has begun moves to ensure Ashaka Cement shares are traded so as to provide liquidity for investors of the cement firm.

A top official of NASD confirmed the development to THISDAY on Monday, saying, “we are in conversation.”
The NASD official expressed optimism that the talks with Ashaka Cement board and management would be positive.

According to him, “getting Ashaka Cement on the NASD platform would provide the needed visibility and an avenue the shareholders who opted to remain with the company even after its delisting from NSE.”
Ashaka Cement Plc opted for a voluntarily delisting of the company from the NSE after it did not meet the exchange’s Free Float Deficiency provision of 20 per cent.

According to the directors, Lafarge Africa Plc currently holds 84.97 per cent of Ashaka Cement, bringing the free float that is tradable on the NSE to 15.03 per cent as against 20 per cent stipulated by the exchange.
The directors had explained that is not improbable that given this free float deficiency, the NSE could take enforcement action and initiate a regulatory delisting, given that the free float deficiency is not likely to be remedied, hence the decision to delist and operate as an unlisted company.

Apart from the free float deficiency, the directors explained that over the last five years there had been little or no trading activity with only 0.20 per cent of the shares held by the minority shareholders being traded.
“Neither the company nor any shareholders are benefiting from the continued listing as shareholders are not getting any exit opportunity and their investments have been locked up and they find it difficult to dispose of their shareholding. Moreover, the company is bearing unnecessary cost in complying with its listing obligations,” the directors said.

They disclosed that through the voluntary delisting of AshakaCem, they are exercising a regulatory provision that would shield the company from any enforcement action that the NSE may effect and are also providing an exit consideration to minority shareholders who do not wish to remain in an unlisted company.

Meanwhile, the audited results of Ashaka Cement showed that it a decline of 27 per cent in profit after tax (PAT) for the year ended December 31, 2016.
The company posted a revenue of N17.351 billion, showing a marginal fall from N17.415 billion in 2015. Ashaka Cement ended the year with profit before tax of N2.663 billion, down from N3.209 billion in 2015, and PAT of 2.01 billion, compared with N2.76 billion in 2015.