MERGERS, ACQUISITIONS AND FINANCIAL RESULTS
Cellcom’s reviewed bond placement gets the backing of the Central Bank of Liberia
The Central Bank of Liberia (CBL) has backed the business initiative by Cellcom one of the country's leading GSM telephony and internet services provider and has taken steps to ensure that the company's offering of convertible debentures to the Liberian public proceeds successfully.
Central Bank Governor Dr. Mills Jones said the initiative by the GSM Company (to share its success with the Liberian public) was a worthy inventiveness, but because the country's capital market was not yet in place, the Bank, as a regulatory body, has collaborated with the company to protect the future interest of both Cellcom and the public.
On November 8, 2009 Cellcom announced an offering of 500,000 convertible debentures (otherwise known as shares) to the Liberian public, as a way of sharing its success with the Liberian people, the giant GSM Company's management said.
Announced to the public at US$10 per share, the Company's Chief of Operations William Saamoi in December told journalists that the offer was running out.
In its Offering, Cellcom advertised interest payment of a minimum of 10% per annum, a tenor of 5 years for its convertible Debentures and, at the election of each Debenture holder, either the conversion of the face value of the Debenture certificate into shares of common stock or the repayment of the principal invested plus any accrued interests.
Addressing a joint press briefing with Cellcom executives Monday in Monrovia at the Bank, CBL Governor Dr. Jones said "Cellcom Offering comes at a time when the capital market in Liberia has yet to be developed, including having in place the appropriate regulatory and supervisory regime."
He said "the development of a capital market in Liberia has been an interest of the CBL, and the Bank has recently announced the need for avoiding any actions on the part of businesses that have the potential of creating problems that could lead to a loss of confidence of the public in the issuance of shares and/or debt obligations ahead of the establishment of a well functioning capital market."
In line with its mandate to ensure the orderly development of financial and capital markets that are responsive to the needs of the national economy, and to safeguard the public trust and interest in relation to financial transactions, Governor Jones noted, the CBL invited Cellcom to review and discuss its Offering for some modifications.
"Based on these discussions, Cellcom has committed to make changes intended to enhance the disclosure of information about the company and the nature of the debenture being offered with a view to safeguarding the interest and trust of the public and ensuring orderliness in the process of issuing such financial instruments," the Governor said.
Among the changes, according to the Governor, the title of the Investment Guide of Cellcom Offering of Convertible Debenture will be changed from "Private Placement of up to 500,000 Convertible Debentures at US$10 Per Unit Payable in Full upon Application" to read "Placement of up to 500,000 Convertible Debentures at US$10 Per Unit Payable in full upon Application".
He said the removal of the word "Private" obligates Cellcom to augment the level of disclosure to the public. Additionally, the disclaimer of Cellcom in reserving the "...right to amend or replace the information at any time and undertakes no obligation to provide the recipient with access to any additional information..." has been changed.
Cellcom has committed to now communicate any changes or replacement of information - with appropriate rationale for changes - by communicating, in a reasonable time, through publications in newspapers of general circulation, radio and/or other media.
Dr. Jones said in the summary of the terms of the Offering, Cellcom will amend its statement to reflect that "this offer is intended, in part, to enable Liberians to eventually participate in the ownership, control and management of the company".
"This should make it clearer to the public that the purchase of these Debentures does not automatically translate into one becoming a 'part-owner' of Cellcom. It is only at the maturity of the Debenture (5 years from now) that an investor may exercise the option of having his or her Debentures converted into shares," the Bank Governor stated.
On the fourth change, among others, Cellcom has committed to further clarify that for those investors who want to be paid in full at the maturity date, the company will pay back the Debentures in full on the maturity date, the issue price plus any unpaid accrued interest. For those investors who wish to become shareholders, Cellcom will convert the principal of its Debentures into shares of common stock.
"Cellcom commits to the provision of this service after August 30, 2010. In effect, this provision makes it easier for holders of the debentures to be able to convert the debenture to cash through agreed upon transactions with third parties ahead of the five year maturity period," Dr. Jones said of the seven changes.
The CBL Governor said though Cellcom has taken the first step into the capital marketbuying and selling capitals it does not give room for other businesses to do like wise, unless they are financially potent and sustainable.
In his remark, Mr. Avi Zaidenberg, the Chairman of Board of Directors of Cellcom said the company was grateful to the CBL Chief and other officials of the Bank "for the opportunity provided, over the course of our meaningful engagements, to explore what is really unchartered financial territory in Liberia."
He said although the Offering of Convertible Debentures is new to Liberia, "Our engagements have afforded us a chance to act positively and progressively together to consider the evolving possibilities of this growing economy, enhance the public trust and confidence, and to develop appropriate mechanisms to embrace what is a certain future in the conduct of business in Liberia."
Zaidenberg indicated that institutions such as the Central Bank of Liberia, and all other regu1ator agencies of the Government, exercising their authorities without fear or favor, will not only provide reassurance for collective quests for increased integrity, orderliness and safeguard of the public trust, but also address concerns about the need for developing and regulating underdeveloped sectors and other complementing aspects of a growing economy.