Ikeja Hotel Plc will place ₦1.13 billion worth of shares on sale to raise funds, a corporate document sent to the Nigerian Exchange Limited (NGX) has revealed.
According to a statement issued by the company, the shares, estimated at a value of over ₦3.54 billion based on Tuesday’s closing price, will be sold to existing shareholders through Rights Issue.
The company said shareholders qualified for the hospitality business’ Rights Issue are individual or institutional investors on the Register of Members as of 13 December 2022.
However, the price the shares will be sold was not disclosed adding that the board of directors will make a decision on the rate.
The company also explained that the Rights Issue to existing shareholders will be based on six new ordinary shares for every 11 ordinary shares held in Ikeja Hotel.
“That additional capital be raised by the issuance of 1,133,888,945 units of unissued shares of the company as a rights issue at the rate to be determined by the board of directors to existing shareholders based on 6 (six) new ordinary shares for every 11 (eleven) ordinary shares held in the company to members on the register of members as at December 13, 2022, based on the 2022 audited accounts of the Company,” the statement read in part.
Ikeja Hotel’s decision to sell a 40.9% stake in the firm comes amid declining revenue as the company’s turnover dropped by 34% between January to June 2023 to ₦4.56 billion, failing to surpass the ₦6.89 billion revenue generated in the same period in 2022.
The firm had been able to save its net profit through a combined 38.12% reduction in Cost of Sales, Sales and Distribution Expenses and Administrative and General Expenses.
The cost of sales and other expenses dropped to ₦3.83 billion in the first half of this year, well below the ₦6.19 billion spent in H1 2022.
According to reports, this followed a drastic reduction in Ikeja Hotel‘s workforce. In 2022, Ikeja Hotel cut down its workers to 201 from 412 the previous year.
The drop in costs and expenses offset the revenue dip in net profit, which rose to ₦397.54 million in the first six months of 2023, in contrast to the ₦120.47 million profit after tax posted in the first six months.
