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CBN Suspends MTN’s Dividend Payout

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MTN
  • Shareholders Fume as CBN Suspends MTN’s Dividend Payout

Shareholders have reacted sharply to the Central Bank of Nigeria (CBN)’s order on the suspension of MTN Group’s dividend payment from its Nigerian subsidiary, MTN Nigeria, over an alleged illegal repatriation of funds to South Africa.

The shareholders, who spoke to The Guardian, yesterday, faulted the move, insisting that dividend that has been declared must be paid.

The South African telecoms giant in a quarterly update to its shareholders, yesterday, in Johannesburg, South Africa, claimed that it was not guilty of the illegal repatriation charges levelled against it by the Nigerian Senate.

The CBN had ordered the four commercial banks operated by MTN to suspend dividend payout from Nigeria. The banks are Standard Chartered Bank, Stanbic IBTC, Diamond Bank and Citi Bank. But CBN Spokesman, Isaac Okorafor, said yesterday that he was not aware of the order.

The crux of the allegation is that MTN did not obtain certificates declaring it had invested foreign currency in Nigeria within a 24-hour deadline stipulated in a 1995 law and therefore the repatriation of returns on those investments was illegal.

MTN runs the biggest wireless phone network in Nigeria, which generates a third of its annual sales. The telecoms firm had this year, agreed to pay a reduced fine of N330 billion ($1.08 billion) to end a long-running dispute over unregistered SIM cards in Nigeria.

The South African firm has also delayed its long-awaited listing on the Nigerian Stock Exchange (NSE), and no explanations from the firm or the exchange for the delay.

Shares in the company have fallen by more than 14 per cent to their lowest level in more than six years since the latest issue surfaced on September 27.

But shareholders, who spoke to The Guardian on the development, criticised the CBN’s decision as high-handed, considering that the dividend is shareholders’ benefits from their investment.

The President, Renaissance Shareholders Association of Nigeria, Timothy Olufemi, described the suspension of the dividend as ‘uncalled for,’ noting that dividend declared is a debt that must be paid by the firm.

“Well, the accusation may be due to payment of cash dividend to foreign shareholders in dollars without due approvals. But, we do not see any reason for the suspension of cash dividend if not that they have done something wrong. It is uncalled for. Dividend must be paid when declared. It is a debt,” he said.

The President, Ibadan Zone, Shareholders Association of Nigeria, Sola Abodunrin, said: “If the dividend has been declared in an annual general meeting, MTN has no right to suspend it. The investigation that is going on is a different thing entirely. A dividend that has been declared must be paid.”

Similarly, the President, Constance Shareholders Association, Shehu Mallam Mikail, who explained that MTN has no right to suspend shareholders’ dividend, noted that the telecoms giant is making profit and getting good returns from Nigeria.

He urged the regulatory authorities to ensure that multinationals operating in Nigeria complied with the rules so as to protect investors’ rights.

Mikail noted that “The illegal transfers do not concern the issue of dividend payout and MTN can only fish out those concerned in the transfer saga and it should not stop the payment of dividend to shareholders because it is an investment.”

According to the President, Association of Telecommunications Companies of Nigeria (ATCON), Olushola Teniola, the CBN cannot stop a legally registered company from declaring dividends or making dividend payments, unless there is evidence of criminal activity or a court order stipulates this in rare cases.

But the President, Ibadan Zone Shareholders Association of Nigeria, Sola Abodunrin, believed the suspension should not affect MTN from listing next year as planned.

According to him, the agreement to list was part of conditions given when they were negotiating a reduction in their fine, “so as a responsible company, I do not think they will renege. Many Nigerians are looking forward to their listing.”

Timothy Olufemi, however, believed strongly that the suspension would affect MTN’s listing next year.

The South African telecoms firm in the letter to its shareholders, confirmed that “MTN Nigeria, four commercial banks, certain MTN Nigeria directors and shareholders, the Central Bank of Nigeria and others appeared before the Senate on October 20, 2016 at the outset of this investigation.

“The allegations are that $13.97 billion was repatriated illegally by MTN Nigeria through its bankers. MTN Nigeria and its bankers are cooperating with the investigation with a view to resolving the matter as expeditiously as possible.

“In the interim, the CBN has instructed the banks to suspend any remittance of dividends until further notice. MTN Nigeria continues to refute the allegations that MTN Nigeria had improperly repatriated funds from Nigeria.

“Consequently, MTN Nigeria will strongly defend any action that would be prejudicial to its interest. MTN Nigeria has no intention to make any dividend payments over the next six months.”

Senator Dino Melaye blew the lid that MTN in connivance with the Minister of Trade and Investment, Okechukwu Enelamah, and four commercial banks exploited the Nigerian financial system to illegally move $13.97 billion out of the country without the required authorisation.

Meanwhile, the embattled telecommunications firm has revealed that its new chief executive will take over three months ahead of plan.

Vodafone European boss, Rob Shuter, was due to start in July next year but MTN said in a statement accompanying its quarterly update that he would now start on March 13, 2017.

South Africa-born Shuter, a banker with risk management background, will inherit a company that is the subject of a parliamentary investigation in Nigeria on whether it unlawfully repatriated $13.97 billion between 2006 and 2016.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Dangote Sugar Refinery Raises ₦42.79 Billion in Successful Commercial Paper Issuance

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Dangote Sugar Refinery Plc

Dangote Sugar Refinery PLC has successfully raised ₦42.79 billion through the issuance of Series 4 and 5 Commercial Paper notes.

The issuance, announced on Friday, underscores the company’s robust financial strategy and strong market confidence in its operations.

The Series 4 notes, amounting to ₦12.93 billion, were issued for a tenure of 181 days with a yield of 23.00%.

The Series 5 notes, on the other hand, totaled ₦29.86 billion, were issued for a tenure of 265 days, and offered a yield of 25.00%. These notes were issued under the company’s ₦150 billion Commercial Paper Issuance Programme.

The issuance saw substantial participation from a diverse group of investors, including Pension and Non-Pension Asset Managers, as well as other institutional and individual investors.

This broad interest highlights the trust and confidence the market has in Dangote Sugar Refinery’s financial health and operational strategy.

Mrs. Temitope Hassan, Company Secretary and Legal Adviser of Dangote Sugar Refinery PLC, expressed her satisfaction with the successful issuance.

“This achievement is a testament to the strong investor confidence in Dangote Sugar Refinery’s business model and financial stability. The funds raised will be instrumental in supporting our short-term working capital and funding requirements, enabling us to continue our growth trajectory and maintain operational excellence.”

The successful issuance of the commercial paper notes aligns with Dangote Sugar Refinery’s strategic objectives of maintaining a flexible and diversified funding base.

By tapping into the commercial paper market, the company ensures that it has the necessary liquidity to meet its operational needs while also positioning itself to take advantage of growth opportunities in the competitive sugar industry.

Dangote Sugar Refinery PLC, a subsidiary of the Dangote Group, remains one of Nigeria’s leading sugar producers.

The company continues to play a pivotal role in the country’s sugar industry, contributing significantly to the economy and ensuring the availability of high-quality sugar products for consumers.

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Dangote Group Expands Refinery Storage Capacity to 5.3 Billion Litres

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Dangote Refinery

The Dangote Group has announced a significant expansion of its refinery storage capacity.

The expansion, disclosed by Alhaji Aliko Dangote, President of the Dangote Group, during his address at the Afreximbank Annual Meetings and AfriCaribbean Trade & Investment Forum in Nassau, The Bahamas.

Currently boasting a storage capacity of 4.78 billion litres, the Dangote Petrochemical Refinery is set to increase this figure by an additional 600 million litres, bringing the total capacity to an impressive 5.3 billion litres.

This expansion underscores Dangote’s commitment to transforming Nigeria into a hub for refined petroleum products and solidifies the refinery’s role as a strategic reserve for the nation.

Addressing stakeholders at the forum, Dangote highlighted the refinery’s pivotal role in addressing longstanding challenges in Nigeria’s energy sector, particularly the absence of strategic reserves for petrol.

“The country doesn’t have strategic reserves in terms of petrol, which is very dangerous. But in our plant now, when you came, we had only 4.78 billion litres of various tankage capacity. But right now, we’re adding another 600 million,” Dangote affirmed.

The expansion comes amidst various operational challenges faced by the refinery, including attempts by international oil companies to hinder its operations.

Dangote asserted that these challenges, aimed at impeding the success of the refinery, were indicative of broader resistance to change within the oil industry.

“We borrowed the money based on our balance sheet. I think we borrowed just over $5.5bn. But we paid also a lot of interest as we went along, because the project was delayed because of a lack of land, also the sand-filling took a long time,” Dangote revealed, emphasizing the resilience required to overcome these obstacles.

Moreover, Dangote expressed optimism regarding the refinery’s capacity to influence regional fuel prices, citing the success story of diesel price reduction following the refinery’s market entry.

He indicated that while petrol pricing remains a complex issue governed by governmental policies, the refinery’s operations would strive to offer competitive pricing and supply stability.

The expansion of the Dangote Petrochemical Refinery not only marks a significant milestone in Nigeria’s industrial landscape but also positions the conglomerate as a key player in reshaping Africa’s energy dynamics.

As construction progresses towards completion, the refinery aims to further consolidate its role in meeting regional energy demands and fostering economic growth across West Africa.

With plans to commence sales of refined products in the coming months, Dangote’s refinery is poised to play a transformative role in Nigeria’s quest for energy independence and regional economic integration.

As stakeholders await the refinery’s operational debut, expectations are high for its potential to drive down fuel prices and enhance energy security across the region.

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Musk Secures Shareholder Support for Compensation and Texas Relocation

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Elon Musk

Tesla Inc. shareholders have voted in favor of Chief Executive Officer Elon Musk’s compensation package and the company’s state of incorporation change to Texas.

The results, announced at Tesla’s annual meeting in Austin on Thursday, reflect shareholder approval despite challenges such as declining sales and a significant drop in stock price.

Musk had hinted at the likely outcome the night before the meeting in a post on X, stating that both resolutions were “passing by wide margins.”

The electric car manufacturer did not disclose the detailed breakdown of the votes.

The approval of Musk’s pay package, although advisory, demonstrates continued investor support for his leadership.

The package had previously been nullified by a Delaware judge in January, but Tesla plans to appeal. Should the appeal fail, relocating Tesla’s legal home to Texas may provide the board an opportunity to reintroduce the compensation plan under potentially more favorable legal conditions.

Originally approved in 2018 with 73% of the vote, Musk’s compensation plan makes him eligible for up to $55.8 billion in stock options if Tesla achieves specific milestones.

Currently, the value of these options is approximately $48.4 billion, according to the Bloomberg Billionaires Index.

Musk’s leadership has been a topic of significant debate, particularly in light of his oversight of six companies and his tendency toward abrupt strategic changes.

Earlier this year, Musk orchestrated Tesla’s largest layoffs to date, only to rehire some of the affected workers weeks later.

In addition to the compensation package, shareholders voted to reelect James Murdoch and Kimbal Musk to Tesla’s board.

Murdoch, son of media mogul Rupert Murdoch, has served on the board since 2017, while Kimbal Musk, Elon’s younger brother, has been a member since 2004.

Tesla’s stock saw a modest increase of 0.3% in extended trading following the announcement, though the stock had fallen about 27% over the year compared to a 14% gain in the S&P 500 Index.

During the annual meeting, held at Tesla’s Austin headquarters, shareholders showed enthusiastic support as Musk took the stage in a black Cybertruck T-shirt.

He shared updates on the company’s progress, including the introduction of three new models, the expansion of the Supercharger network, and record production levels for Cybertrucks.

“A lot of people said Cybertruck was fake, never going to come out. Now we’re shipping a lot of Cybertrucks,” Musk stated.

In addressing his substantial pay package, Musk clarified that it is structured as options requiring him to hold Tesla stock for five years. “I can’t cut and run, nor would I want to,” he said.

The push for shareholder support involved a dedicated “Vote Tesla” website and advertising on X, with Tesla investors and executives vocalizing their backing for Musk.

Despite some opposition from significant investors like Norway’s sovereign wealth fund and the California Public Employees’ Retirement System, the measures passed.

The relocation to Texas has been formalized, with the certificate of conversion available on the Texas Secretary of State website.

However, any future compensation plan will need to be restructured to comply with Texas legal standards, should the Delaware appeal fail.

The recent shareholder vote may enhance Tesla’s position in the forthcoming appeal. Delaware Chancery Court Judge Kathaleen St. Jude McCormick’s January decision to void the compensation package cited conflicts of interest and inadequate disclosure.

The appeal’s outcome, expected later this year, will determine the next steps for Musk’s compensation plan.

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