Story: Boahene Asamoah
THREE major shareholders of CAL Bank have blocked a resolution by the bank to raise an additional capital of GH¢200 million, on fears that their shares will be diluted.
The three shareholders, including Social Security and National Insurance Trust (SSNIT), who together hold 45.38 per cent equity stake in the bank, also blocked three other resolutions of the bank put forward by the directors at the third annual general meeting (AGM) of the bank in Accra yesterday.
SSNIT has 26.63 per cent shares, Mr Afare Donkor, an individual investor, has 11.05 per cent shares, while Mr Daniel Ofori, also an individual investor and owner of White Chapel, owns 7.7 per cent shares.
Representatives of Mr Donkor and Mr Ofori associated themselves with the views expressed by SSNIT.
A verbal exchange between SSNIT and the directors ensued when the Managing Director of the bank, Mr Frank Adu Jnr., sought to explain the need for the bank to source additional funds in respect of Bank of Ghana (BoG) proposals for banks to re-capitalise.
The new BoG minimum capital requirement would demand from commercial banks to increase their capital from the current GH¢7 million to between GH¢55 million and GH¢60 million starting from next year.
Mr Adu explained that he had consulted with SSNIT and the other two shareholders both on phone and at personal meetings on the need for the bank, an indigenous bank, to expand its capital base to underwrite bigger transactions and become more profitable.
He was responding to assertions by a representative of SSNIT, Mr Ken Alorzegah, who had questioned the rationale for a gigantic capitalisation of GH¢200 million when the BoG had requested only ¢60 million capitalisation over a period of four years.
Mr Alorzegah’s fears stemmed from the explanation given in the annual report that would allow the bank to look for a strategic investor to take up the shares of the bank and would have a controlling stake in it.
Mr Adu debunked that argument and stated that while it was possible to have a strategic partner, the directors were looking for a rights issue to raise the needed capital.
Mr Adu’s responses did not go down very well with the SSNIT officials and this prompted the lead counsel of SSNIT, Mr Ernest Thompson, to take over the microphone from his colleague and said that SSNIT would not take kindly to remarks by Mr Adu Jnr to the effect that SSNIT was consulted and that SSNIT rather should see reason in the need for the recapitalisation.
Mr Thompson challenged Mr Adu to mention when they contacted SSNIT on the issues and stated that among the other reasons why the directors of the bank were seeking to raise the GH¢200 million capital was to invest some of the money in the building of their new office complex and divest into a properties company, reasons which SSNIT objected to and urged Mr Adu Jnr “to tell shareholders the truth”.
In the ensuing confrontation, the chairman of the board stopped the “hostilities” and put a motion on the floor and shareholders voted against the decision to raise additional capital.
SSNIT had earlier also blocked a proposal for the shareholders to approve an increase in the remuneration of directors, which Mr Alorzegah said was about 78 per cent increase, as well as a proposal to amend regulation 10(a) of the company’s regulations, and called on shareholders to vote against that proposal, which the shareholders did.
Another resolution to create a pool of shares of up to three per cent issued shares for distribution to non-executive directors and executive of the bank over a period of three-years was also voted against.
Some of the minority shareholders were incensed about the outcome of SSNIT’s decision and seeming control of affairs of SSNIT at the AGM.
Mr Abaka Biney, a renowned shareholder, burst out his frustrations and questioned why SSNIT should thwart the efforts of the management to raise capital needed for the growth of the company and asked what SSNIT had been doing with workers money and walked out of the meeting.
Some investment analysts this reporter spoke to, on conditions on unanimity, said the decision by SSNIT was not in the best interest of the bank.
One investment analyst even alleged that SSNIT was seeking a grand design to merge CAL bank with two other banks, Merchant Bank and TTB, in which SSNIT holds substantial shares, for which reason SSNIT had taken that action.
Another analyst also blamed the directors of the bank for failing to explain the issues very well to convince shareholders.
The Board Chairman of the bank, Mr George Victor Okoh, earlier in his address said the bank together with its subsidiary achieved a 36 per cent net profit from GH¢4.7 million in 2006 to GH¢6.4 million in 2007.
He said the bank’s share price appreciated by 100 per cent from a price of GH¢0.22 at the end of 2006 to GH¢0.44 at the end of the year under review.
Mr Okoh said the board had recommended a 40 per cent increase in the dividend payoff amounting to GH¢0.0105 per share.
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