Frequently Asked Questions

The Bank requires an aggregate sum of approximately N380 billion to achieve the Capital Adequacy Ratio that has been stipulated by the Central Bank of Nigeria. The current State of the Nigerian Capital Market and the quantum of funds required has informed the need to seek equity investments from other investors.

AMCON is the Asset Management Corporation of Nigeria. AMCON was established as a resolution vehicle and is an integral part of the ongoing reforms of the financial sector by the Central Bank of Nigeria which are aimed at promoting stability in the banking sector, strengthening Bank balance sheets and efficiently resolving the non-performing loan assets of banks.

The Asset Management Corporation Act was passed into law on July 19, 2010 and established AMCON as a corporate body.

AMCON will restore the Bank’s negative shareholders’ funds (Net Asset Value) to zero through the injection of the Financial Accommodation Amount.

Union Global Partners Limited (‘’UGPL’’) is the special purpose vehicle that been registered by the African Capital Alliance Consortium for the purpose of acquiring shares of Union Bank. The ACA Consortium comprises of ACA B-Holding Limited, The Keffi Group VIII LLC, ABC Holdings Limited and the Discovery Group.

AMCON is a resolution that has been established to take such action as will be required to
stabilize the banking sector.

The current state of the Nigerian capital markets in addition to the quantum of funds required to recapitalize the Bank - approximately N380 Billion - presents a risk that the sole participation of the shareholders will not achieve the required recapitalisation amount.

Furthermore, the issues of corporate governance raised by the regulators would not have been addressed.

The ACA Consortium’s bid of US$750,000,000 comprises an equity investment of USS$500,000,000 and Tier II Investment of US$250,000,000.

UGPL will be paying USS$500,000,000 for their shareholding in Union Bank.

Union Bank is keen for shareholders to participate in the recapitalisation of the Bank and the Board has taken a decision to include the Rights Issue in the process.

Each Shareholder will be entitled to receive 5 (Five) new ordinary shares for every 9 (Nine) Shares held, based on the shareholding subsequent to share reduction.

The Rights Shares will be issued at N6.81035 per share.

5 new shares have been provisionally allotted on the basis of 9 shares currently held (post-restructuring).

Due to challenges with mail logistics and the nationwide strike in recent weeks there may be a few weeks delay in receipt of the rights documents.

However if by end of the third week in January 2012, you still have not received your rights document please contact the nearest UBN or URL branch to procure a replacement copy.

A replacement copy is basically a blank application form, on which details of; account number, shareholding, rights allotment and rights application value are stated.

Such replacements must be signed and stamped by an officer of the Bank, Registrar, and Issuing House/s who authenticated the shareholders’ identity/details.

We expect that all shareholders will take advantage of the rights issue by taking up their full allotments.

However, there is no obligation on any shareholder to take the rights in full as some or all of the allotted rights may be renounced.

All shareholders are allowed to request and pay for additional shares as stated on the application form.

In the event of over-subscription, the rights are first allotted in full to each shareholder based on their allotment.

After this, additional shares are allotted proportionately by applying a flat percentage to all shareholders, until a 100% of Offer Value is achieved.

Value for any excess un-allotted shares is thereafter refunded to each shareholder with token compensation for the time value of money.

Renounced shares may be traded through a stockbroker for value to the shareholder.

However, where the trading option is not exercised such rights along with those renounced by other shareholders are offered to those shareholders who request for additional shares over and above your allotment.

The Companies and Allied Matters Act 2004 Section 80 (2) specifies the minimum age of record for a shareholder as 18 years. For anyone younger than this age, investment in shares must be through a trust account. Some useful practices for such trust investments are;

a) Buying such shares in the name of one or the two parents/guardians for subsequent transfer to the child on attainment of the legal age of 18 years. However, transfer costs may be significant due to probable capital appreciation over time (price and bonus accretion) and/or inheritance taxes in the event of the death of the parent/s or guardian.

b) Using a corporate trustee (such as Union Trustees Limited) to create and manage a trust account. In other instances, a corporate vehicle such as a family-owned company name may be used to purchase and warehouse these shares. At the attainment of the legal age (of 18 years) each child may then be nominated/elected as a Director/Shareholder. This is a tax and cost efficient trust structure.

Traditionally, rights issues were exclusively reserved for existing shareholders of a Company.

However, with the advent of trading in shares on The Nigerian Stock Exchange, it is now possible for a non-shareholder to purchase renounced shares from the existing shareholder of record (at the ex-rights price), and then apply and pay for the rights.

This process is well defined and understood by all stockbrokers accredited to act as Returning Agents to the rights Issue.

The first indication of value in this Rights Offer is the discount to the market price (Rights- N6.81, Market Price- N11.15) on the Offer opening date. This represents a price discount of 38% upfront, rich pickings for value investors in an otherwise bearish market! However, note that there is no technical suspension on the market price and as such the discount on rights price varies from day-to-day.

Other indicators of probable capital gains are;

a) The composition of the foreign investment group UGPL, which consists of banks (Standard Chartered Bank and ABC) and reputable venture and equity fund managers. The diversity and pedigree of the consortium reflects technical/business competence and assurance of access to the major global financial centres/funds.

b) In the old (pre-reconstructed) register of shareholders, 22000 shareholders aggregated 75% of the shareholding. Post-reconstruction and the Special Placing the two core investors (AMCON and UGPL), will jointly aggregate 79% of the issued shares of the Bank! In essence, the trading float (volume available for trading on The Nigerian Stock Exchange) shall not exceed 21% of the issued shares. In reality, providing for corporate investors and the strong brand equity of the Bank, trading float is not expected to be more than 10-12% at any given time. This provides a strong potential for capital gains, after the Rights Offer is completed and the shares are listed.

A Scheme of Arrangement is an agreement between a company and either the holders of its
securities or its creditors, recognised by the law. The arrangement has to be approved by the
Federal High Court.

Union Bank of Nigeria is undertaking a Scheme of Arrangement which will reconstruct/restructure both the authorised and issued share capital of the Bank, as this will enable the recapitalisation of the Bank.

Union Bank’s authorised and issued share capital will be cancelled, pro-rata, by N5,488,437,500 (Five Billion, Four Hundred and Eighty-Eight Million, Four Hundred and Thirty-Seven Thousand, Five Hundred Naira) comprising 10,967,875,000 (Ten Billion, Nine Hundred and Sixty-Seven Million, Eight Hundred and Seventy-Five Thousand) ordinary shares of 50 Kobo each.

The shares are being cancelled to create a more compact share capital and minimise the associated costs of recapitalisation, given that shares are to be issued under the recapitalisation process. The alternative will be to incur the expenses associated with increasing the authorised share capital.

Following the share reconstruction, the authorised and issued share capital of the Bank will beN1,266,562,500 (One Billion, Two Hundred and Sixty-Six Million, Five Hundred and Sixty-Two Thousand, Five Hundred Naira) comprising 2,533,125,000 (Two Billion, Five Hundred and Thirty-Three Million, One Hundred and Twenty-Five Thousand) ordinary shares of 50 Kobo each.

Each shareholder will retain 3 ordinary Shares for every 16 Shares that were held previously.

The Federal High Court has ordered the Bank to hold an Extra-Ordinary General Meeting, known as a Court-Ordered Meeting (‘’COM’’). The shareholders of Union Bank will be required to pass the special resolutions approving the share capital reconstruction at the COM.

The Bank will be recapitalized through the following three-step process:

a. The Asset Management Corporation of Nigeria (‘’AMCON’’) will inject the Financial Accommodation amount which will take the bank’s negative Net Asset Value to zero (0)

b. The shareholders of Union Bank will be offered participation in a Rights Issue

c. UGPL, the special purpose vehicle of the African Capital Alliance Consortium, will invest the Equity Investment

At the conclusion of the share reconstruction and recapitalisation, the issued share capital of
the Bank will be held as follows (assuming that shareholders participate fully in the Rights Issue):

• Shareholders 21.48%
• AMCON 18.51%
• UGPL 60.01%

Union Bank of Nigeria Plc has announced the completion of its share reconstruction exercise. Consequently, a total of 2,533,125,000 shares of N0.50 par value at N11.15 per share were admitted on the Daily Official List on Friday, December 23, 2011, in replacement for the former issued shares of 13,509,726,273.

3 new shares were issued in replacement for every 16 shares previously held for example; a previous holding of 10,000 shares has translated into 1,875 shares after restructuring.

All old certificates have been invalidated by virtue of the capital restructuring. New certificates have been issued and posted to all shareholders on the Register of Members as at October 21, 2011.

All CSCS holdings have been translated into new shares in the respective CSCS accounts at the ratio of 3 new for every 16 (approximate values may be obtained by multiplying your old holding by a factor of 0.1875, and rounding down).

NO! The old shares of UBN were trading on the floor at N2.09 prior to the reconstruction, while the reconstructed shares were listed on The Nigerian Stock Exchange

Your new certificates, along with all others are already in the post. If not received by mid-December, please direct enquiries to you’re the UBN or URL branch nearest to you to track your certificate.