Tuesday, February 10, 2009

Transcorp broke all rules as NSE DG presides Tuesday, 10 February 2009 00:29 by our reporters

While in the past year investors in the stock market have seen the value of their investment eroded very significantly, investors in Transcorp are doubly troubled. 
The over 250,000 retail investors that put their money in Transcorp few years ago, with a promise of long term returns on their investment are reeling. As the company is set for its first extra-ordinary general meeting (EGM) scheduled for the 25th of this month, investors are of the opinion that the director general of the Nigerian Stock Exchange (NSE), Ndidi Okereke-Onyiuke, has presided over at best a very loose structural company called a conglomerate. 
Investors are concerned that it took the company many years to hold the first meeting of investors. During these years, there was no presentation of the financial situation of the company to investors through the stock market. Investors in Transcorp are routinely taken for granted and have not had any say in the running of the company since inception.

Investors now wonder very loudly the phony arrangement of having the director of the stock exchange, in effect, the umpire of the exchange, as the head of one of the companies listed on the same exchange. One investor asserted that “Ndi Okereke-Onyiuke as chairman of Transcorp is like the governor of the Central Bank being a chairman of one the banks”. “Is that acceptable”, he queried.
Companies listed on the stock exchange are expected to present facts and figures to investors. But Transcorp has not done that. During the period, directors of the company were changed without input from shareholders.
Okereke-Onyiuke as chairman has presided over the spectacular fall in the fortunes of the company. Last Friday, the shares traded for N0.65, a 4.41 percent drop over the previous trading day’s price. In the last, the stock has traded under N1 per share.
Since the start of the corporation, set up in the mode of “Chaebols” of South Korea, it has had three CEOs. When the present CEO, Tom Isegholi, arrived there were promises of the revival of NITEL after he presented positive earnings and profit outlook for the company. Since the promises, investors wondered what has happened, despite the billions spent on the company in salaries and consultants’ fees.
While the fortunes of investors decline, the promised revival of NITEL has failed to take off and the viable revenue streams from Transcorp Hotel and SAT 3 were daily used to prop up NITEL with significant hiring of consultants from abroad. Insider sources claim that the hiring of consultants are guises used in fleecing the fortunes of the company.
Indeed, the history of Transcorp appears to be that of breaking rules or contravening basic ethics in business. First, Transcorp was alleged to have broken the rules in listing on the Nigerian Stock Exchange (NSE). Normally, companies in the country can only be listed on the NSE after three years of incorporation in the second tier segment of the market and five years of incorporation for those seeking listing in the first tier segment of the market. 
Transcorp was listed on the NSE only after two years, making it the first company to be listed on the NSE within two years of incorporation. 
Those opposed to the listing had noted that such exceptional waiver for a company to be listed would have been overlooked except that the company was connected with the powers that be. Moreover, Transcorp’s prospectus showed that at the point of listing, it owed banks about N67.1 billion, N7.0 billion more than the N60 billion, the company went to source from the capital market. 
The company had budgeted N25 billion to refinance part of the N65 billion loan it took to finance its acquisition of NITEL/MTEL. This still leaves a significant part (about N30 billion) of this loan unpaid which would have attracted significant interest payments in the last few years. Since, though, audited results, if available, have not been presented to shareholders. Investigations also reveal that the business is indebted to four major banks to the tune of about N80 billion, and struggling to manage the debts.


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