Five companies quoted on the Nigerian Stock Exchange have been placed on technical suspension pending a public issue of additional capital on behalf of the companies.
This companies are 7Up Bottling Company, Dunlop Nigeria Limited, John Holt Nigeria Ltd, John Holt Investment Company and Grommac Industries Nigeria Ltd.
By this development, the share prices of the company are to remain static until the new issues to be floated on their behalf are rounded off by the regulatory bodies of the stock market.
According to our capital market sources, 7UP Bottling Company is offering Right Issue to its shareholders.
Right issued, The Republic gathered is a kind of bonus share issued to existing shareholders at a price below the current market.
7Up, it was learnt is strapped for cash for its capital development and being unable to raise loan from banks has resorted to Right Issue and debentures being handled by Nigerian-American Merchant Bank.
The cost of raising primary issue at the Stock Exchange is said to have scared 7 Up from offering new issues. Dunlop Nigeria Ltd on the other hand, is said to be still going through the process of its share valuation by SEC as a result of its offer for subscription of new shares last month, Until the shares are fully subscribed it will remain on technical suspension.
Capital market sources disclosed that John Holt Nigeria Ltd, and John Holt Investment Companies are going into merger, the market price of their shares have been frozen.
According to capital market sources, Grommac Nigeria Ltd, the first company to be listed on the Second-Tier Securities market is at present faced with some controversies.
Capital market sources said that Rubber Board that own majority shares of the company have been disbanded.
As a result of the sales of Rubber Board shares, Grommac was on technical suspension.
What is disturbing to Capital Market watchers is the controversy between the company and its former stock brokers and registrar, Central Point Investment.
Capital Market sources disclosed that last month, Grommac circulated letters terminating the appointment of Centre Point as its Registrars while a little later Centre Point circulated another letter saying they have resigned their appointment as registrar of Grommac Nigeria Limited.
According to sources at The Nigerian Merchant Securities and Capital Trust Brokers most Nigerian companies are strapped of cash.
They are finding difficulties in raising funds through the Capital Market because of the cost involvement.