Aliko Dangote, Africa’s richest man had on Monday November 16 2015 resigned from the board of Dangote Flour Mills (DFM) following South Africa’s Tiger Brands decision not to provide further financial support.
Tiger Brands had retained the Dangote brand despite acquisition of about 70 percent share with nearly $200 million in 2012, but it claimed not to have made money since the acquisition. The DFM brand was changed to Tiger Branded Consumer Goods Plc of Nigeria immediately after Dangote withdrew from its board.
A notice to the Nigerian Stock Exchange by TBCG on the14th December 2015 confirmed that N10 billion will be injected by DIL into TBCG, after which Tiger Brands will divest its 65.7% shareholding to DIL for a nominal consideration and write off its shareholder loans to TBCG.
When Tiger Brands Limited, a leading South African consumer goods company became majority shareholder of DFM in September 2012, Dangote Industrial Limited retained 10 per cent, while other investors have 20 per cent.
The notice said, after discussions between both parties the new agreement was reached, subject to its terms being considered and approved by the Securities and Exchange Commission (SEC), in accordance with regulatory requirements.
According to the notice, other details of the transaction showed that TBCG is maintained as a viable going concern, able to retain its employees and meet its obligations to its stakeholders, with the transaction envisaging that sufficient capital will be injected into TBCG in order to stabilise the business and place it on a sustainable path aimed at creating value for its stakeholders.
In addition, Tiger Brands will assume and settle outstanding debt guaranteed on behalf of TBCG.
The former directors of TBCG, Messrs Olakunle Alake, Arnold Ekpe and Asue Ighodalo have agreed to re-join the board of TBCG and have consequently been reappointed with effect from 10th December 2015
The terms of the Transaction will be set out in a Share Sale and Purchase Agreement (SSPA), which the Parties will enter into.
The Transaction and The Parties will, as soon as is practicable, submit details of the Transaction and the SSPA to SEC for approval. Apart from the approval of the SEC, implementation of the Transaction will also be subject to the fulfilment of certain conditions
The transaction is also precedent on the approval of the Exchange Control Division of the South African Reserve Bank.
If this transaction is approved, Dangote Industrial Limited would own 80 per cent of the company while other investors would retain their 20 per cent.
By Pita Ochai