Mechanical Lloyd to buy back over 16million shares
Mechanical Lloyd Plc, an Accra-based automobile company, has offered to purchase shares from shareholders after it announced plans to de-list from the Ghana Stock Exchange (GSE).
The company had posted increasing losses from 2017, and shareholders approved a resolution at its 28th Annual General Meeting held on October 15, 2020, to delist the company from the Ghana Stock Exchange.
Ahead of the exercise to have the company removed from the local bourse, Mechanical Lloyd has made an offer to its shareholders.
“Pursuant to regulation 15 of the GSE Listing Rules, MLC is undertaking a tender offer, on behalf of the Promoters, to Qualifying Shareholders to purchase all their outstanding 16,900,487 ordinary shares at an offer price of GHS0.10 per share,” the firm said in a statement on March 1.
The offer commences on March 8, 2021, with the delisting date set for April 16, 2021.
Qualifying shareholders are therefore advised to review the offer and to make a decision on the offer with the timelines outlined below:
Consistent losses
The fortunes of the company have been dwindling with the directors stating that the “company incurred a net loss of GH¢7,780,130 during the year ended 31 December 2019 and its current liabilities exceeded its current assets by GH¢6,833,108 as of that date”.
This was partly due to Ford Motor Campany’s severed tied with the firm.
The directors’ report stated that Ford Motor Company embarked on a ‘Cluster Strategy’ and re-organised its representation in the Sub-Saharan Africa market and as a result, “Mechanical Lloyd is no longer representing Ford Motor Company as the authorised Ford dealer in Ghana from mid-2019 financial year, with the full impact being felt during the year ended 31 December 2019”.
The directors added that they were implementing a 24-month recovery plan to restructure Mechanical Lloyd’s operations and restore the business to profitability.
The recovery plan was expected to include the refocusing of marketing efforts on BWM and Massey Fergusson brands and the launching of a pre-owned vehicle line of business to assist BMW vehicle owners in trade-in vehicles for new ones.
Mechanical Lloyd further closed some branches and commenced disposing of certain assets that were no longer required for its business.
It was expected that the sale of the assets would be used to pay off existing debts as part of the company’s restructuring plans.
About Mechanical Lloyd
Mechanical Lloyd Company Limited is an Accra-based company engaged in automobile and farm equipment sales and service. They are listed on the stock index of the Ghana Stock Exchange, the GSE All-Share Index.
Mechanical Lloyd was incorporated on August 7, 1970, and was listed on the stock exchange on 10 May, 1994.
The company has three vehicle sales divisions, covering Ford, BMW, and Massey Ferguson vehicles, and a fourth service division.