Neimeth Pharmaceutical PLC is in financial crisis.
The company is set to sell a part of the company to a private investor after receiving approval, as the pharmaceutical firm goes through financial woes.
Neimeth’s cash level has been depleting, with the company’s operational loss increasing from N143.13 million of the period ended December 2020 to N295.84 million the corresponding period.
Its turnover had slumped from N394.56 million to N192.11 million during the same period, while reporting N309.11 million loss for the period ending December 2021, higher than the N178.80 million loss recorded in 2020.
The management’s inability to halt Neimeth poor turnover has led to investors losing interest in holding the company’s shares, resulting to a bearish run and sentiment building around the firm in the capital market.
According to Ripples Nigeria analysis, year-to-date performance of Neimeth stock showed a -13.75% decline in shareholders total investment, as a result of investors engaging in sell off and its bearish state.
Between January to March 24, investors still holding Neimeth’s shares lost a total N493.78 million, with their total investment in the firm plunging to N3.09 billion from N3.58 billion of January, reflecting the financial situation the company is stuck in currently.
Amid significant asset decrease and drop in earnings, Neimeth will part with 12.83% to a private investor willing to pay a total of N1,320,381,375.60 – this will make cash available for the board to meet financial obligations.
Read also: Neimeth leads gainers, C&I Leasing tops losers as NGX closes at N22.12trn market cap
The N1.32 billion will be used to fund a new plant and working capital needs, curbing Neimeth’s trouble meeting its financial obligations. It was gathered that 628,753,036 ordinary shares of 50k each at N2.10k per Share will be issued to raise the capital.
Aside from seeking private investment to meet its financial demands, the management has also received approval to raise N3,679,618,625 from the Nigerian equity market by way of right issue.
To achieve this, Neimeth board will dilute the company’s stock by creating 2,373,947,500 ordinary shares of 50kobo each at NI.55kobo per share “on the basis of five (5) new Ordinary Shares for every four (4) Ordinary Shares (Rights Issue) on such other terms and conditions as the Directors may deem fit to determine”. a statement released on Thursday showed.