African Alliance Insurance Plc is seeking to raise up to N12 billion through a combination of convertible debt, equity offerings and asset disposals as the insurer moves to strengthen its capital position and meet regulatory recapitalisation requirements.
Shareholders approved the proposed capital-raising framework at the company’s Extraordinary General Meeting held in Lagos.
Under the resolution, the board was authorised to raise the funds through private placement, rights issue, public offer, convertible subordinated debt notes, asset sales and other structures permitted under Nigerian law.
A major element of the plan is a zero-coupon convertible subordinated debt instrument to be issued through private placement.
The instrument would initially provide the company with debt funding but could subsequently be converted into ordinary shares if specified conditions or conversion events are met.
The board will determine the conversion price, conversion ratio, triggering conditions and other terms of the debt instrument, subject to the approval of relevant regulators and agreement with prospective investors.
The structure gives African Alliance an avenue to raise funds through debt while retaining the option of converting the obligation into equity under agreed conditions.
As part of the recapitalisation programme, shareholders also approved the disposal of selected company properties and other assets.
The insurer was further authorised to revalidate and issue unissued or legacy shares in support of the capital-raising exercise.
Where the existing share capacity proves inadequate for the approved transactions, African Alliance may increase its share capital and issue additional shares to investors.
Shareholders also granted the board authority to appoint professional advisers and other transaction parties, negotiate the terms of the proposed capital-raising arrangements and execute the necessary documentation.
The board was similarly empowered to complete the regulatory filings and other steps required to implement the recapitalisation plan.
The company said shareholder approval also covered actions previously undertaken by the board in its engagements with the National Insurance Commission, Securities and Exchange Commission and other relevant regulatory bodies.
The approved funding options form part of African Alliance’s efforts to strengthen its financial capacity and align its capital structure with applicable regulatory requirements.
The insurer will now proceed with the various elements of the programme, subject to the necessary regulatory approvals and the terms agreed with investors and other stakeholders.
