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UPDATE 1-Nigeria's UAC to spin off loss-making real estate unit by July

Published 07/05/2020, 16:50
Updated 07/05/2020, 16:54
© Reuters.
UACN
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(Adds details)
By Chijioke Ohuocha
ABUJA, May 7 (Reuters) - Nigerian conglomerate UAC UACN.LG
plans to complete an unbundling of its majority stake in its
loss-making property arm UPDC by July, subject to coronavirus
disruptions that might affect approval timings, the group
managing director said on Thursday.
Fola Aiyesimoju said UAC would unbundle the stake to
shareholders, subject to regulatory approvals.
UAC said it upped its stake to 93.9% in the real estate unit
from 64.2% following a rights issue, where it converted its
bridge loan to equity to conserve cash.
UPDC, which widened losses in 2019, got a fresh cash
injection of 250 million naira ($694,000) from a share sale in
April.
UPDC invested in the luxury real estate market at a time
when the Nigerian economy was growing. But high interest rates
have hurt margins coupled with economic challenges following a
recession four years ago before the ongoing pandemic.
The company -- with interests in food and restaurants,
agricultural feed, paints and logistics -- said it expects
consumer demand to be constrained and supply chains disrupted
with delays to capital investments.
UPDC has not paid a dividend to the parent company for some
time, but Aiyesimoju said the real estate company was conserving
cash especially during the coronavirus pandemic.
Shares in UAC lost 1.4% on Thursday to 6.75 naira while UPDC
gained 8.7% to 0.98 naira.

($1 = 360.0000 naira)

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