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Vision Group seeks Shs25b in new share sale
Vision Group is seeking capital to bolster its operations that have been impacted by three years of losses. Photo / Michael Kakumirizi
What you need to know:
- On October 16, Vision Group will seek authorization from shareholders to sell 156.25 million preference shares to government to bolster its operational capital
Vision Group, which produces newspaper and broadcast titles including New Vision and Bukedde, among others, has told shareholders that it has reached an understanding in which government will acquire more 156.25 million shares to bolster its operating capital.
The company, listed on the Uganda Securities Exchange as New Vision Printing & Publishing Company Limited, said in a notice the new shares will be preference in structure, giving government a priority position in terms of sharing profits, and will be fixed at 3 percent of the share value.
Vision Group is currently controlled by government, with a shareholding of 53 percent of the 76.5 million existing shares, while the rest - 47 percent - are held by the public.
In the notice, Vision Group said government, through the Ministry of Finance, will buy more 156.25 million shares valued at slightly over Shs25b, to add on its 40.5 million shares, which will increase the company’s share structure to 232.8 million.
Previously, market analysts had projected that government would cede a part of its stake in Vision Group but it now looks like the capital boost will be achieved through the purchase of additional shares, with other alternatives such as corporate bonds and commercial debt, not considered.
A share issuance to the stock market would also have been tricky since Vision Group has had a mixed performance dominated by a loss streak and characterised by a low-performing stock at the USE.
Vision also indicated in a notice published yesterday that it intends to increase its share capital from Shs1.5b to Shs26.5b by issuing more shares, which government will buy at Shs160 per share.
The new shares are non-cumulative, which means that if the company doesn’t make enough money to pay the 3 percent profit in a certain year, government, won’t get the unpaid amount in the future, and won’t make up for it later.
They are also non-redeemable in the sense that once they are sold, Vision can’t buy them back, thus, government will keep them until it decides to sell them or convert them into ordinary shares, which then gives it voting rights over them and other benefits.
Mr Denis Kizito, the Capital Markets Authority director of market research, yesterday said Vision is seeking to raise capital to firm its operating expenditure, which has been affected by a shift in the media landscape, from which Vision gets the largest share of its revenue.
“The problem is that [Vision] didn't have preferential shares in its share capital structure. And that is why it wants to get a voting green light from its shareholders to get a resolution,” he said.
Vision Group has invited shareholders for an annual general meeting due on October 16, to create a class of new shares – preference – consider an increase in share capital and to amend clauses of the company’s memorandum of association, among others.
The amendments will also seek to update some documents to reflect a much larger share capital and make it possible to convert shares into preference (that can be changed into ordinary shares) and not redeemable shares (which can be bought back by the company).
This will give Vision Group more flexibility in the way it manages its shares and investors.
Mr Kizito said the deal will be completed by just a paper transaction between Vision and government and a company resolution, which will then be filed with the company registrar.
“The new shares will not be listed on the stock exchange. It’s a private deal but since the company is owned by shareholders with ordinary shares, it will have to be agreed upon in an annual general meeting for them to have a say on a deal that will change their capital structure,” he said.
Performance
In the last four years, Vision Group has registered losses in three of the four years, with 2022 being a tough year, while the company’s stock value has also plummeted, which has created anxiety among investors and shareholders.
At present, Vision Group’s market value has declined to Shs11b from Shs41.78b in 2017.
USE details also indicate that whereas there have been share offers, they have been matched with no bids, thus, creating a stagnant stock whose price has remained at Shs153 for three years now.
During the October 16 meeting, shareholders are expected to be given a clear picture of how the new deal will be structured.
