Indications have emerged that the Securities and Exchange Commission is delaying approval for the Union Bank of Nigeria Plcs N9.52bn rights issue because the bank has yet to provide information on how the previous management spent proceeds of its 2005 public offer to the commission.The bank in 2005 sought to raise N37.8bn by way of offer for subscription to the public and a rights issue that was oversubscribed to the tune of N55.1bn.According to the offer prospectus, the bank earmarked N14.68bn or 38.8 per cent of the offer proceeds for working capital, including capacity building and N11.11bn or 29.36 per cent for information technology upgrade.The bank also proposed an N8bn or 21.14 per cent investment in Union Bank (United Kingdom) Plc, its offshore subsidiary, and another N3.17bn or 8.38 per cent in the then ongoing banking consolidation, where it acquired four small-sized competitors- Union Merchant Bank, Broad Bank, Hallmark Bank and Universal Trust Bank. The remaining N880m was to be ploughed into opening 23 new branches across the country.It was gathered that SEC was concerned mainly with how the UK investment was utilised by the previous executive management.Our correspondent also gathered that SEC raised the same query to the current management because the bank was going concern.An official of SEC, who begged not to be mentioned, confirmed the report, saying, "what the SEC just want from the bank is to explain how the funds were used." Union Bank, after signing the Transaction Implementation Agreement with its core investor, ACA Consortium, had said it would raise N9.5bn rights issue as part of its recapitalisation process. The bank had said in a statement that the signing of implementation agreement with its core investor would translate to the ACA Consortium investing $750m in the bank consisting of $500m equity and $250m Tier II capital.The statement added that the full capitalisation of the bank would be achieved through the Asset Management Corporation of Nigerias investment to bring net asset value to zero, Union Global Partners Limiteds investment and a Rights Issue, to be made to the banks existing shareholders.When contacted, the Head, Corporate Affairs, Union Bank, Mr. Francis Barde, said, "SEC has told us to provide details on how the proceeds of the 2005 public offer was spent. They said the proceeds were not properly accounted for by the executive management at that time. We are working on the statistics, we will send them to SEC soon."
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