Shareholders of Red Star Express Plc have injected N1.35 billion new equity capital into the company to strengthen its operations.
The new capital was through a subscribed rights issue. Filing at the Nigerian Stock Exchange (NSE) showed that Red Star Express raised N1.347 billion through a rights issue of 336.86 million ordinary shares of 50 kobo each at N4 per share. The rights issue was pre-allotted on the basis of four new ordinary shares for every seven ordinary shares held by August 21.
The shares from the rights issue totaling 336.86 million ordinary shares of 50 kobo each have been added to the outstanding shares in the name of Red Star Express on the NSE, increasing the company’s issued share capital from 589.497 million ordinary shares of 50 kobo each to 926.352 million ordinary shares of 50 kobo each.
The company had indicated that the net proceeds of the rights issue, estimated at N1.31 billion, would be used to finance an expansion of its operations, deployment of improved technology and increase in working capital.
A breakdown showed that the company planned to spend N704 million to develop its warehouse facilities on the Lagos-Ibadan Expressway and at the Murtala Muhammed International Airport Cargo Terminal. It would use N201.65 million to purchase trucks. Also, a total of N154.29 million would be used to improve the group’s information and communication technology (ICT) and Enterprise Resource Planning Solution while the balance of N250 million would serve as working capital.
Chairman, Red Star Express Plc, Alhaji Suleiman Barau, said the success of the rights issue would enable the company to implement key initiatives that will enhance its ability to achieve sustainable growth and value creation for all shareholders.
“By accepting your rights, you will be reinforcing your support for Red Star to explore new opportunities required to enhance the company’s ability to achieve sustainable growth and value creation for all shareholders,” Barau, a formal Deputy Governor of Central Bank of Nigeria (CBN), said.
Red Star Express has three subsidiaries – Red Star Freight Limited; Red Star Logistics Limited and Red Star Support Services Limited, as well as Red Star Express, a licensee of FedEx, world’s leading air express company with over 650 aircraft and more than 270 delivery destinations globally.
FedEx has consistently been rated among the top 10 most admired companies in the world over the past 10 years.