Message Ven 6 Avr 2012 19:20

Investrust shareholders agree to rights offer

Investrust shareholders agree to rights offer
April 6, 2012


INVESTRUST Bank shareholders have authorised a rights offer to raise about K40 billion to increase the capital base to the statutory requirement of K104 billion.

The bank has resolved that the board be authorised to exercise powers of the company to allot equity securities amounting to 1.875 billion shares via a rights issue to ordinary shareholders.

At the 21st annual general meeting held in Lusaka last Friday, the bank shareholders also authorised the board to proceed with a consolidation of the authorised shares on a ratio of a new share for every 1,000.

The shareholders have agreed to issue an allotment of new ordinary paid-up shares as bonus shares from the existing Share Premium Reserves (SPR) to satisfy the new Bank of Zambia (BoZ) minimum capital requirements.

The par value of the ordinary shares was also increased to K1, 000 from the current K1.00. SPR is composed of deposits that exceed the nominal capital after deduction of capital transfer tax. The K40 billion to be raised will increase the bank’s capital base to meet the new BoZ minimum capital requirements and participate effectively in economic growth.

Recently, Government through BoZ hiked the minimum capital requirements for local commercial banks to K104 billion from K12 billion as a measure to enable banks mobilise additional resources, and provide more money for credit and participate effectively in economic growth.

Accordingly, Investrust Bank plans to implement procedures on how to raise its capital base through recapitalisation and restructuring of the company’s balance sheet.

“Under the same procedure , through a share bonus issue, the bank intends to capitalise part of existing reserves and the share premium (from rights offer) to meet the new BoZ minimum capital requirement for local banks composed of at least 80 percent as issued and paid up capital, and the balance of 20 percent being reserves,” reads the annual report.

According to the bank’s annual report,the banks’ shareholders have since resolved to authorise the board of directors to undertake all processes necessary to effect and implement the rights offer, share consolidation and bonus issue.

Meanwhile, the bank has not declared any dividend to shareholders as at December 31, 2011 to allow the bank meet the capital requirements for local commercial banks.

Commenting on the bank’s plan, Investrust managing director Friday Ndhlovu said though shareholders were worried about the development, most of them understood that the bank required more capital to meet growing demand.

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