By Chijioke Ohuocha
ABUJA, May 7 (Reuters) - Nigerian conglomerate UAC plans to complete an unbundling of its majority stake in its loss-making property arm UPDC by July, subject to coronavirus disruptions that might affect approval timings, the group managing director said on Thursday.
Fola Aiyesimoju said UAC would unbundle the stake to shareholders, subject to regulatory approvals.
UAC said it upped its stake to 93.9% in the real estate unit from 64.2% following a rights issue, where it converted its bridge loan to equity to conserve cash.
UPDC, which widened losses in 2019, got a fresh cash injection of 250 million naira ($694,000) from a share sale in April.
UPDC invested in the luxury real estate market at a time when the Nigerian economy was growing. But high interest rates have hurt margins coupled with economic challenges following a recession four years ago before the ongoing pandemic.
The company — with interests in food and restaurants, agricultural feed, paints and logistics — said it expects consumer demand to be constrained and supply chains disrupted with delays to capital investments.
UPDC has not paid a dividend to the parent company for some time, but Aiyesimoju said the real estate company was conserving cash especially during the coronavirus pandemic.
Shares in UAC lost 1.4% on Thursday to 6.75 naira while UPDC gained 8.7% to 0.98 naira. ($1 = 360.0000 naira) (Reporting by Chijioke Ohuocha; Editing by Elaine Hardcastle and Lisa Shumaker)