Cadbury explains capital reduction

Emil Moskofian, the Managing Director, Cadbury Nigeria Plc, on Thursday said the company embarked on capital reduction because it had capital in excess of its needs.
Moskofian said this at the company’s ‘facts behind the capital reduction’ at the Nigerian Stock Exchange in Lagos.
“We can fund all our investments from the current business within the next five years,” Moskofian said.
Moskofian said that the company settled for capital reduction because it would generate sufficient capital for expansion and operational requirements.
According to him, the capital reduction exercise does not mean lack of appetite for Nigerian market.
He said that the company would continue to invest and grow its business in Nigeria because of the vast investment opportunities.
“Nigeria is the biggest economy in Africa and cannot be neglected by anybody,” Moskofian said.
He, however, assured investors of enhanced growth and returns through new investments and new products.
Sam Ndata, the Doyen of Stockbrokers, commended the company for explaining the rationale behind the capital reduction.
Ndata, however, said the capital reduction was not a good investment decision, saying the excess funds could have been re-invested for additional profit.
He urged the company to carry the stockbrokers along for better investment decisions in the future.
The company, had on December 19, 2013 sought shareholders’ approval for reduction of its capital base by about N12 billion.
Under the capital reduction plan, the company returned excess capital of N11.9 billion to its shareholders by cancelling two out of every five ordinary shares held by shareholders.
The exercise reduced the share capital account by an amount equivalent to the par value of the cancelled shares and share premium accounts by about N11.27 billion.