UAC of Nigeria (UACN) Plc has said it would unbundle its ma jority stake from its loss-making property arm UACN Property Development Company (UPDC) by July 2020.
In a statement, Group Managing Director, UAC of Nigeria (UACN) Plc, Fola Aiyesimoju, said the plan is, however, subject to COVID-19 disruptions that might affect approval timings. He stressed that the process would be completed to unbundle the stake to shareholders, subject to regulatory approvals. ‘
The UACN boss said the conglomerate upped its stake to 93.9 per cent in the real estate unit from 64.2 per cent following a rights issue, where it converted its bridge loan to equity to conserve cash.
According to him, UPDC invested in the luxury real estate market at a time the economy was growing but noted that high interest rates have hurt margins coupled with challenges following a recession four years ago before the ongoing pandemic.
On why the real estate arm of the company has not paid dividend to the parent company for some time, Aiyesimoju said it was conserving cash, especially during this pandemic.
He explained that UPDC regrettably widened losses in 2019 though it got fresh cash injection of N250 million ($694,000) from a share sale in April. UAC have interests in food and restaurants, agricultural feed, paints and logistics.
It is expected that consumer demand will be constrained while supply chains will be disrupted with delays to capital investments.