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Fund managers and other shareholders of Cadbury Nigeria plc look set to latch onto the opportunities in the company’s proposed rights issue to existing shareholders. 
Stanbic IBTC Bank plc is the issuing house to the rights issue, which is expected to raise the sum of N22.2 billion. 
According to the details of the issue, a total of 2.57 billion ordinary shares will be offered to shareholders in the ratio of seven new ordinary shares for every three held as at 26 June 2009. 
However, BusinessDay learnt weekend that the challenge for Nigerian shareholders is the timing of the offer at a time the economy is undergoing a recession. Nigerian investors, according to capital market sources, are afraid of losing part of their shareholding to Cadbury U.K, the parent company and majority shareholder, in the event that not all of them will probably take up their rights in full. 
For those who depend on borrowing to buy shares, they may have problems at this critical period now that banks are not willing to grant loans for share purchases. But the shareholders are angling to participate in order to keep the foreign owners at their current shareholding position. 
Alan Palmer, managing director of the company, confirmed that the net proceeds of the rights issue will be used to repay bank borrowings, thus reducing its interest burden and the balance of the issue proceeds will be applied to fund the improvement of the company’s capacity supporting infrastructure, efficiency initiatives and upgrade of facilities. 
Although, a stockbroker told BusinessDay that the price is fair enough, he was also concerned about the ability of Nigerian shareholders to take up their rights in full. 
“The timing is right for the company which puts them in great control as I am sure Nigerian shareholders will not partake because of funding. Whatever is not taken up by Nigerian shareholders Cadbury UK will, hence, diluting further the Nigerian shareholder base”, he posited. 
Sunny Nwosu, national coordinator of the Independent Shareholders Association of Nigeria (ISAN), said “we need to take our rights in order to avoid a situation whereby the foreign investors will increase their stakes. Although, this is a trying period for everybody, we will ensure that we take up our rights in full. We have observed that the company’s account is getting better and that means we would get rewarded in the long term.”
In the same vein, Timothy Adesiyan, president of the Nigerian Shareholders Solidarity Association (NSSA), implored the company’s registrars to dispatch the rights circular in good time so that those who cannot participate would be able to trade their rights at the Nigerian Stock Exchange (NSE). 
“Shareholders who are unable to take up their rights could trade them on the NSE and enable those who have the money buy the shares,” he said. 
However, analysts who commented on the offer and the prospects for Cadbury Nigeria noted that it has become necessary to get the company to the next stage of its development after the financial crisis of the past two years. 
Besides, the company plans to use part of the proceeds to pay loans that they got from banks thereby reducing interest charges on the loans. 
Chris Newson, Stanbic IBTC Bank’s CEO, who also spoke at the completion board meeting, said he was impressed with the efforts the new management of Cadbury Nigeria were making in turning around the fortunes of the company and urged the shareholders to seize the opportunity of the rights issue to show their confidence in the company’s potential for future growth.