Alleged Milost investment: operators caution Unity Bank on recapitalisation deal

Some capital market operators on Thursday called on the management of Unity Bank Plc to tackle its recapitalisation programme carefully to avoid negative impact on the bank.
The operators spoke to the News Agency of Nigeria in separate interviews in Lagos, while reacting to alleged Milost Global Incorporated, New York-based private equity firm failed investment deal in the bank.
Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., said that the bank should tackle the development with majority to avoid investors and customers negative response.
According to him, the bank should also seek alternative source of funding to boost its operations to ensure profitability.
He said that the bank should either float a rights issue or issue bond inwardly to raise fresh capital to support its operations.
He said: “It is a healthy company that post strong numbers and pay dividends to drive growth and support future growth.’’
He, however, urged investors to be very careful before investing due to market news in order not to burn their fingers.
Omordion said that investors needed to do due diligence before investing but not on mere speculation or hear say.
Boniface Okezie, the National Chairman, Progressive Shareholders Association of Nigeria, told NAN that Milost intended investment and later denials was not good for the bank’s recapitalisation quest.
Okezie said that the story making the round concerning the proposed investment of Milost in Unity Bank was not encouraging for its customers and investors.
He said that the major question that needed an answer was if the private equity firm approached the bank for investment deal.
He said: “Even as the bank is in need of recapitalisation, it must follow due process to ascertain who is investing in them and source of funding, not just any how investor.’’
The shareholder activist said that floating a rights issue or offering would not help the bank’s recapitalisation bid.
Okezie said that the management should look for a competent core investor that could invest in the bank.
NAN reports that Milost Global Incorporated, a New York-based private equity firm, on March 26 said it would no longer go on with its proposed investment in Unity Bank.
The company said this in a statement issued by Kim Freeman, Milost Chief Executive Officer.
Unity Bank had earlier denied knowledge of the investment.
In the statement, Freeman said his company was approached in 2017 by the bank’s chief executive officer and chief financial officer.
The statement said: “Following the call, a desk top due diligence was conducted by Milost to its satisfaction. On September 4, 2017, a one billion naira financing term sheet was fully executed by both Milost and Unity Bank.
“The facility, a combo of equity and debt, was provided on the exciting understanding that Unity Bank would delist on the Nigerian Stock Exchange and move its listing to the USA.
“The signed term sheet was approved by the board of Unity Bank.’’