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Equities Market Extends Losses on Negative Sentiments

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Nigerian Exchange Limited - Investors King
  • Equities Market Extends Losses on Negative Sentiments

The Nigerian equities market extended its weekly depreciation to sixth consecutive week as the Nigerian Stock Exchange (NSE) All-Share Index (ASI), fell by 0.8 per cent to close at 25,333.39 last week.

The market had maintained a steady decline over the past weeks, shedding 3.0 per cent the previous week. Although the weak negative investors sentiments persistent last week, a number of high-capped stocks halted their losses last week, leading to a lower decline of 0.8 per cent. The market capitalisation of the NSE fell by the same margin to close lower at N8.721 trillion. Apart from the NSE ASI, all other indices finished lower during the week with the exception of the NSE Banking and NSE Consumer Goods Indices that appreciated by 0.02 per cent and 0.42 per cent respectively.

Daily Market Performance   Summary

Trading resumed on negative note as  the NSE ASI fell by 0.15 per cent to close at 25,499.00. The depreciation recorded in the share prices of FBN Holdings, Ecobank Transnational Incorporated (ETI), Dangote Sugar, Mobil   Oil and Stanbic IBTC Holdings were responsible for the decline in NSE ASI. Total value of stocks traded on the floors on Monday was N858.54 million, down by 3.34 per cent from N888.17 million the previous day.

Performance across sectors was broadly bearish with only the NSE Industrial Goods Index gaining marginally. The  NSE Insurance Index led sector decliners, falling by  0.6 per cent on account of losses in Continental Reinsurance Plc (-4.8 per cent) and NEM  Insurance (-1.4 per cent). Similarly,  the NSE  Oil & Gas Index closed 0.36 per cent lower as a result of  profit taking in Mobil Oil  (-2.6 per cent) and Total Nigeria Plc(-2.5 per cent). The NSE Banking Index shed 0.6 per cent to close in the red on the back of weak appetite for ETI (-2.0 per cent), Stanbic IBTC (-1.9 per cent) and Zenith Bank (-0.2 per cent). Losses in Dangote Sugar (-4.9 per cent) and International Breweries (-1.5 per cent) depressed the NSE Consumer Goods Index by 0.1 per cent.

The negative sentiments continued to drive the market down on Tuesday, causing the market the NSE ASI to hit a seven-month low. Specifically, the NSE ASI fell by 0.15 per cent to close at 25,461.34, increasing the month-to-date and year-to-date decline to 6.46 per cent and 11.47 per cent respectively.

Tuesday’s decline resulted from heavy sell offs across oil and gas sector. For instance, Forte Oil Plc fell by 9.7 per cent, while Total Nigeria Plc went down by 5.0 per cent. In all, 17 stocks declined compared with 11 stocks that appreciated. Forte Oil Plc led, declining by 9.7 per cent to close at N74.62.

The sell-off in Forte Oil Plc came after the company successfully raised N9 billion bond under its N50 billion bond issuance programme. The   company had said the funds  would  be used to refinance existing short term commercial bank loan obligations and to finance the retail outlet expansion of the company.

The Group Chief Executive Officer, Forte Oil, Mr. Akin Akinfemiwa  had said: “With the raising of this initial capital which has been fully underwritten shows the confidence the investing public has in Forte Oil Plc as an investment of choice. This bond programme being the first in the downstream sector, is testament to Forte’s position within the downstream sector and allows the company to actualise the vision of the Board to continue to provide value to its shareholders regardless of the economic climate.”

The NSE Oil & Gas Index led the decliners with 2.5 per cent, while NSE Consumer Goods Index followed with a marginal decline of 0.02 per cent. On the positive side,  the NSE  Banking Index rebounded 0.05 per cent  on the back of bargain hunting in Access Bank  (+0.5 per cent), Zenith Bank Plc (+0.4 per cent) and Guaranty Trust Bank (+0.3 per cent).

The bear run was halted on Wednesday as the NSE ASI 0.22 per cent to close higher at 25,517.00 on bargain hunting by investors on some of the highly discounted stocks to increase their portfolio. Similarly, market capitalisation added N19.2 billion to close at N8.8 trillion. At the close trading, 19 stocks gained compared to 11 that depreciated.

Sterling Bank Plc led the price gainers with 5.7 per cent, followed by Oando Plc with 5.0 per cent. Flour Mills of Nigeria Plc and PZ Cussons Nigeria Plc advanced 4.9 per cent each. Conversely, Forte Oil Plc led price losers with 6.2 per cent to close at N70.00 per share. Julius Berger Nigeria plc trailed with 5.0 per cent, just as African Prudential Registrars Plc and Total Nigeria Plc rose by 4.3 per cent.

In terms of sectoral performance, all the sectors closed in the green except the NSE Oil and Gas Index that shed weight. The NSE  Banking Index led sector gainers after appreciating 0.75 per cent following investors’ swoop on GTBank Plc(+1.2 per cent) and  United Bank for Africa Plc (+1.2 per cent). The uptrend in Nestle Nigeria Plc (+1.3 per cent), PZ Cussons Nigeria Plc (+4.9 per cent) and Nigerian Breweries Plc (+0.2 per cent) bolstered the  NSE Consumer Goods Index by 0.50 per cent. Also the NSE Insurance Index appreciated 0.2 per cent on account of AIICO Insurance Plc (+3.5 per cent), while the NSE Industrial Goods Index rose 0.1 per cent.

One day after rebounding, the bears returned and reclaimed the control of the market, pushing the NSE ASI down by 0.10 per cent to close at 25,490.70. The depreciation recorded in the share prices of Forte Oil, Stanbic IBTC, Total, Zenith Bank and Nigerian Breweries were responsible for the decline. Similarly, market capitalisation lost N9.1 billion to close at  N8.8 trillion.

Sectorally, the performance was mixed.  The  NSE Oil & Gas Index topped the losers’ chart closing 1.4 per cent lower due to profit taking in Total (-9.0 per cent) and continuous sell-off in Forte Oil (-1.4 per cent) while the  NSE Consumer Goods Index  shed ).13 per cent on the back of weak appetite in Nigerian Breweries Plc (-0.2 per cent) and International Breweries  (-4.1 per cent). On the  positive side, the NSE Banking Index went up by  0.15 per cent  following gains  posted by  GTBank (+0.9 per cent) and Access Bank (+0.2 per cent) which offset losses in Zenith Bank (-1.1 per cent). The NSE Insurance Index rose marginally 0.02 per cent on account of a rally in NEM Insurance (+4.2 per cent).

The market closed lower on Friday as the NSE ASI fell by 0.62 per cent to close at 25,333.39. The depreciation recorded in the share prices of Forte Oil, Stanbic IBTC, Lafarge, Zenith Bank and Dangote Cement accounted for the decline.

Market turnover

Meanwhile, investors traded 639.439 million shares worth N6.455 billion in 11,799 deals were traded last week, compared with 823.547 million shares valued at N5.444 billion that exchanged hands  in 11,634 deals the previous week. The Financial Services Industry remained the most traded with 491.758 million shares valued at N2.211 billion traded in 6,241 deals; thus contributing 76.90 per cent and 34.25 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 64.507 million shares worth N58.500 million in 681 deals. The third place was occupied by the Consumer Goods Industry with a turnover of 54.901 million shares worth N3.307 billion in 2,386 deals.

Gainers and losers

The price movement chart showed that 27 equities appreciated in price during the review week, higher than 10 equities of the previous week. Conversely, 26 equities depreciated in price, lower 48 equities of the previous week. In terms of gainers, Flour Mills of Nigeria Plc led  with 20.3 per cent, trailed by African Prudential Registrars Plc with 14.5 per cent. Fidson Healthcare Plc appreciated by 12.9 per cent, while Unity Bank Plc rose by 9.2 per cent. Champion Breweries Plc, Mobil Oil Nigeria Plc and Diamond Bank Plc garnered 8.4 per cent and 7.1 per cent in that order among others.

Conversely, Forte Oil Plc led the price losers, declining by 24 per cent, trailed by Okomu Oil Palm Plc with 13.8 per cent, while Neimeth International Pharmaceuticals Plc shed 12.7 per cent. Airline Services and Logistics Plc. UACN Property Development Company Plc and Total Nigeria Plc declined by 11.8 per cent, 11.7 per cent ND 10.9 per cent respectively.

Goddy Egene and Nosa Alekhuogie

The Nigerian equities market extended its weekly depreciation to sixth consecutive week as the Nigerian Stock Exchange (NSE) All-Share Index (ASI), fell by 0.8 per cent to close at 25,333.39 last week.

The market had maintained a steady decline over the past weeks, shedding 3.0 per cent the previous week. Although the weak negative investors sentiments persistent last week, a number of high-capped stocks halted their losses last week, leading to a lower decline of 0.8 per cent. The market capitalisation of the NSE fell by the same margin to close lower at N8.721 trillion. Apart from the NSE ASI, all other indices finished lower during the week with the exception of the NSE Banking and NSE Consumer Goods Indices that appreciated by 0.02 per cent and 0.42 per cent respectively.

Daily Market Performance   Summary

Trading resumed on negative note as  the NSE ASI fell by 0.15 per cent to close at 25,499.00. The depreciation recorded in the share prices of FBN Holdings, Ecobank Transnational Incorporated (ETI), Dangote Sugar, Mobil   Oil and Stanbic IBTC Holdings were responsible for the decline in NSE ASI. Total value of stocks traded on the floors on Monday was N858.54 million, down by 3.34 per cent from N888.17 million the previous day.

Performance across sectors was broadly bearish with only the NSE Industrial Goods Index gaining marginally. The  NSE Insurance Index led sector decliners, falling by  0.6 per cent on account of losses in Continental Reinsurance Plc (-4.8 per cent) and NEM  Insurance (-1.4 per cent). Similarly,  the NSE  Oil & Gas Index closed 0.36 per cent lower as a result of  profit taking in Mobil Oil  (-2.6 per cent) and Total Nigeria Plc(-2.5 per cent). The NSE Banking Index shed 0.6 per cent to close in the red on the back of weak appetite for ETI (-2.0 per cent), Stanbic IBTC (-1.9 per cent) and Zenith Bank (-0.2 per cent). Losses in Dangote Sugar (-4.9 per cent) and International Breweries (-1.5 per cent) depressed the NSE Consumer Goods Index by 0.1 per cent.

The negative sentiments continued to drive the market down on Tuesday, causing the market the NSE ASI to hit a seven-month low. Specifically, the NSE ASI fell by 0.15 per cent to close at 25,461.34, increasing the month-to-date and year-to-date decline to 6.46 per cent and 11.47 per cent respectively.

Tuesday’s decline resulted from heavy sell offs across oil and gas sector. For instance, Forte Oil Plc fell by 9.7 per cent, while Total Nigeria Plc went down by 5.0 per cent. In all, 17 stocks declined compared with 11 stocks that appreciated. Forte Oil Plc led, declining by 9.7 per cent to close at N74.62.

The sell-off in Forte Oil Plc came after the company successfully raised N9 billion bond under its N50 billion bond issuance programme. The   company had said the funds  would  be used to refinance existing short term commercial bank loan obligations and to finance the retail outlet expansion of the company.

The Group Chief Executive Officer, Forte Oil, Mr. Akin Akinfemiwa  had said: “With the raising of this initial capital which has been fully underwritten shows the confidence the investing public has in Forte Oil Plc as an investment of choice. This bond programme being the first in the downstream sector, is testament to Forte’s position within the downstream sector and allows the company to actualise the vision of the Board to continue to provide value to its shareholders regardless of the economic climate.”

The NSE Oil & Gas Index led the decliners with 2.5 per cent, while NSE Consumer Goods Index followed with a marginal decline of 0.02 per cent. On the positive side,  the NSE  Banking Index rebounded 0.05 per cent  on the back of bargain hunting in Access Bank  (+0.5 per cent), Zenith Bank Plc (+0.4 per cent) and Guaranty Trust Bank (+0.3 per cent).

The bear run was halted on Wednesday as the NSE ASI 0.22 per cent to close higher at 25,517.00 on bargain hunting by investors on some of the highly discounted stocks to increase their portfolio. Similarly, market capitalisation added N19.2 billion to close at N8.8 trillion. At the close trading, 19 stocks gained compared to 11 that depreciated.

Sterling Bank Plc led the price gainers with 5.7 per cent, followed by Oando Plc with 5.0 per cent. Flour Mills of Nigeria Plc and PZ Cussons Nigeria Plc advanced 4.9 per cent each. Conversely, Forte Oil Plc led price losers with 6.2 per cent to close at N70.00 per share. Julius Berger Nigeria plc trailed with 5.0 per cent, just as African Prudential Registrars Plc and Total Nigeria Plc rose by 4.3 per cent.

In terms of sectoral performance, all the sectors closed in the green except the NSE Oil and Gas Index that shed weight. The NSE  Banking Index led sector gainers after appreciating 0.75 per cent following investors’ swoop on GTBank Plc(+1.2 per cent) and  United Bank for Africa Plc (+1.2 per cent). The uptrend in Nestle Nigeria Plc (+1.3 per cent), PZ Cussons Nigeria Plc (+4.9 per cent) and Nigerian Breweries Plc (+0.2 per cent) bolstered the  NSE Consumer Goods Index by 0.50 per cent. Also the NSE Insurance Index appreciated 0.2 per cent on account of AIICO Insurance Plc (+3.5 per cent), while the NSE Industrial Goods Index rose 0.1 per cent.

One day after rebounding, the bears returned and reclaimed the control of the market, pushing the NSE ASI down by 0.10 per cent to close at 25,490.70. The depreciation recorded in the share prices of Forte Oil, Stanbic IBTC, Total, Zenith Bank and Nigerian Breweries were responsible for the decline. Similarly, market capitalisation lost N9.1 billion to close at  N8.8 trillion.

Sectorally, the performance was mixed.  The  NSE Oil & Gas Index topped the losers’ chart closing 1.4 per cent lower due to profit taking in Total (-9.0 per cent) and continuous sell-off in Forte Oil (-1.4 per cent) while the  NSE Consumer Goods Index  shed ).13 per cent on the back of weak appetite in Nigerian Breweries Plc (-0.2 per cent) and International Breweries  (-4.1 per cent). On the  positive side, the NSE Banking Index went up by  0.15 per cent  following gains  posted by  GTBank (+0.9 per cent) and Access Bank (+0.2 per cent) which offset losses in Zenith Bank (-1.1 per cent). The NSE Insurance Index rose marginally 0.02 per cent on account of a rally in NEM Insurance (+4.2 per cent).

The market closed lower on Friday as the NSE ASI fell by 0.62 per cent to close at 25,333.39. The depreciation recorded in the share prices of Forte Oil, Stanbic IBTC, Lafarge, Zenith Bank and Dangote Cement accounted for the decline.

Market turnover

Meanwhile, investors traded 639.439 million shares worth N6.455 billion in 11,799 deals were traded last week, compared with 823.547 million shares valued at N5.444 billion that exchanged hands  in 11,634 deals the previous week. The Financial Services Industry remained the most traded with 491.758 million shares valued at N2.211 billion traded in 6,241 deals; thus contributing 76.90 per cent and 34.25 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 64.507 million shares worth N58.500 million in 681 deals. The third place was occupied by the Consumer Goods Industry with a turnover of 54.901 million shares worth N3.307 billion in 2,386 deals.

Gainers and losers

The price movement chart showed that 27 equities appreciated in price during the review week, higher than 10 equities of the previous week. Conversely, 26 equities depreciated in price, lower 48 equities of the previous week. In terms of gainers, Flour Mills of Nigeria Plc led  with 20.3 per cent, trailed by African Prudential Registrars Plc with 14.5 per cent. Fidson Healthcare Plc appreciated by 12.9 per cent, while Unity Bank Plc rose by 9.2 per cent. Champion Breweries Plc, Mobil Oil Nigeria Plc and Diamond Bank Plc garnered 8.4 per cent and 7.1 per cent in that order among others.

Conversely, Forte Oil Plc led the price losers, declining by 24 per cent, trailed by Okomu Oil Palm Plc with 13.8 per cent, while Neimeth International Pharmaceuticals Plc shed 12.7 per cent. Airline Services and Logistics Plc. UACN Property Development Company Plc and Total Nigeria Plc declined by 11.8 per cent, 11.7 per cent ND 10.9 per cent respectively.

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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Insurance

Sanlam to Acquire 60% Stake in MultiChoice’s Insurance Arm for R1.2bn

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insurance

South African insurance giant Sanlam Limited has announced plans to acquire a 60% stake in NMS Insurance Services (NMSIS), the insurance subsidiary of pay TV operator MultiChoice Group, for R1.2 billion.

This strategic acquisition aims to enhance Sanlam’s footprint in the African insurance market and leverage MultiChoice’s extensive subscriber base across the continent.

In a joint statement released on Tuesday, both companies revealed that the deal includes a long-term commercial arrangement designed to expand insurance and related financial services to MultiChoice’s diverse audience.

The transaction also features a performance-based cash earn-out potential of up to R1.5 billion, contingent upon the gross written premium generated by NMSIS by the end of 2026.

Paul Hanratty, CEO of Sanlam Group, expressed optimism about the acquisition, stating, “This partnership provides a unique opportunity to combine our market presence and technological capabilities, fostering growth and market penetration while creating synergies beneficial to all stakeholders.”

Calvo Mawela, CEO of MultiChoice, highlighted the strategic significance of the collaboration, noting, “This deal not only enhances the value we provide to our subscribers but also taps into Sanlam’s expertise to drive innovation and growth in our insurance offerings across Africa. It’s a testament to the hard work and dedication of our teams.”

NMSIS has shown impressive growth, with gross written premiums increasing by 36% year-on-year and profit after tax rising by 51% in the first quarter of 2024.

MultiChoice plans to use the proceeds from the sale for working capital while retaining a 40% interest in NMSIS.

The move comes as MultiChoice faces economic challenges, including a 13% drop in subscribers in key markets such as Nigeria, Angola, Kenya, and Zambia due to economic hardships and currency devaluations.

Despite these setbacks, the partnership with Sanlam is seen as a strategic step to bolster its financial services offerings and stabilize revenue streams.

The announcement also follows recent regulatory developments, with MultiChoice entering a Cooperation Agreement with Groupe Canal+ SA after Canal+ acquired a 45.20% stake in MultiChoice, necessitating a mandatory offer under South African takeover regulations.

As the African insurance market continues to grow, Sanlam’s acquisition of a significant stake in NMSIS positions both companies to capitalize on emerging opportunities, providing innovative insurance solutions to millions of customers across the continent.

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Finance

GTBank Takes 60 Bank Executives to Court Over N17bn Loan Dispute

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GTBank -Investors King

Guaranty Trust Bank (GTBank) has initiated legal proceedings against 60 top executives from 13 commercial banks in Nigeria.

The action stems from an ongoing dispute involving a N17 billion Anchor Borrowers Programme loan granted to AFEX Commodity Exchange.

The executives, including chairmen, chief executive officers, directors, and company secretaries, are facing contempt of court charges for allegedly failing to enforce a No-Debit-Order on AFEX Commodity Exchange’s accounts. The legal battle, which has drawn significant attention in the financial sector, is being closely monitored by industry stakeholders.

Details of the Case

The Federal High Court in Lagos, presided over by Justice CJ Aneke, signed an order to hold the executives accountable for disobeying its ruling dated May 27, 2024.

The court’s decision mandates the executives, including those from prominent banks such as Access Bank, Citibank, Jaiz Bank, Union Bank, Fidelity Bank, and First Bank of Nigeria Plc, to comply with the directive or face jail time.

The case, registered as FHC/L/CS/911/2024, involves GTBank and AFEX Commodity Exchange. The court had previously ordered 20 banks to transfer funds from AFEX’s accounts to GTBank until the outstanding N17.81 billion loan is repaid.

This sum includes the principal amount of N15.77 billion and additional recovery costs and expenses totaling N2.04 billion.

Contempt Proceedings

The legal notice, titled ‘Order to Serve Notice of Disobedience to Order of Court via Newspaper Publication,’ was published in national dailies, signaling the gravity of the situation.

The notice serves as a warning to the bank executives about the consequences of failing to adhere to the court’s order.

In addition to the commercial banks, the Nigerian Deposit Insurance Corporation (NDIC), acting as the liquidator for Heritage Bank, has also been cited for contempt.

The matter is set for further hearing next Thursday, where the court will decide the fate of the implicated executives.

Background and Implications

The dispute originates from a loan facility extended to AFEX Commodity Exchange under the Central Bank of Nigeria’s (CBN) Anchor Borrowers Programme.

The loan was intended to finance smallholder farmers, with repayment expected through the sale of agricultural produce. However, AFEX reportedly defaulted on the loan, prompting GTBank to seek legal recourse.

AFEX has countered by stating that it has repaid 90% of the loan and is in ongoing discussions with the CBN regarding the remaining balance. The commodities exchange has cited economic challenges and macroeconomic policies, such as the naira redesign, which adversely affected the farmers’ ability to repay the loans.

The court has also permitted GTBank to take control of AFEX’s 16 warehouses across seven states, allowing the bank to sell the stored commodities to recover the outstanding loan.

Industry Reaction

The case has sparked concerns about the efficiency and integrity of Nigeria’s banking and financial sectors.

Charles Akinbobola, a senior energy analyst at Sofidam Capital, said, “The challenge of the power sector has not entirely been the scarcity of funds. Several trillions of naira have been pumped into that industry. The sector has been plagued by the shortcomings of its managers.”

Experts like Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, emphasize the need for addressing fundamental issues in the electricity value chain, such as technical and commercial losses, which continue to burden consumers with inefficiency costs.

As the legal proceedings unfold, the financial community will be watching closely to see how this high-stakes battle impacts the involved parties and the broader financial sector in Nigeria.

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Banking Sector

Guaranty Trust Holding Plans N500 Billion Share Offering

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Guaranty Trust Holding Company Plc (GTCOPLC) has announced plans to raise up to N500 billion through a new share offering, according to a preliminary prospectus filed with the Securities and Exchange Commission (SEC).

This move aims to support the company’s ambitious growth and expansion strategy.

GTCOPLC’s proposed offering will involve the subscription of ordinary shares of 50 kobo each, although the exact number of shares and the price range are yet to be determined.

The offering includes a concurrent filing of a preliminary universal shelf registration statement, allowing the company to issue various types of securities, potentially raising up to $750 million in multiple currencies.

Purpose of the Offering

The funds raised from this offering will primarily be allocated towards:

  1. Business Growth and Expansion: GTCOPLC plans to invest significantly in technology infrastructure to enhance its current operations. Additionally, the company intends to establish new subsidiaries and make selective acquisitions of non-banking businesses.
  2. Recapitalization of Guaranty Trust Bank Limited: Part of the proceeds will be used to strengthen the capital base of its banking subsidiary.

Target Investors and Structure

The offering is structured to attract both institutional and retail investors. It will be divided into two main tranches:

  • Nigerian Tranche: An institutional and retail offering aimed at eligible investors within Nigeria.
  • International Tranche: A private placement targeting qualified institutional buyers outside Nigeria.

Listing and Trading

GTCOPLC has also filed an application with the Nigerian Exchange Limited (NGX) to list and admit the new ordinary shares for trading on the NGX Official List.

The company anticipates opening the offering by July 2024.

Financial Strategy

The universal shelf registration will enable GTCOPLC to issue a variety of securities over time, with a total value of up to $750 million (or its equivalent in Nigerian Naira).

This approach provides the company with flexibility to raise capital in different markets during the programme’s validity period. The current proposed offering will be the first issuance under this new programme.

Regulatory Compliance

GTCOPLC emphasized that this notice does not constitute an offer of securities for sale in the United States or to U.S. persons, as defined under Regulation S of the U.S. Securities Act of 1933.

The offered shares have not been, and will not be, registered under the U.S. Securities Act or any state securities laws, and cannot be sold in the United States without proper registration or an applicable exemption.

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