Neco puts off merger with Premier; to issue 1:0.84 right shares

ShareSansar, March 14:

In a sudden turn of events, Neco Insurance Company Limited has decided to put off merger with Premier Insurance, and to issue right shares instead to meet its paid-up capital requirement.

With this the much-expected first ever merger between insurance companies has been effectively put off.

The special Annual General Meeting of Neco held yesterday was due to endorse a special proposal for its merger with Premier Insurance Company Limited, inter alias.

But the company officials informed that they would issue 1:0.8488 right shares worth Rs 11.47 crore to meet the paid-up requirement.

It may be noted that during the regular AGM of the company two months ago, many shareholders were not happy with Neco’s plan to opt for merger.

But Neco management had still tried to push with the merger process to shore up its capital base to Rs 20 crore within the current fiscal year as directed by the Insurance Board, the regulator, for the non-life insurers.

Now that Neco has apparently backtracked the merger process owing to pressure from its shareholders, Premier, too, is likely to issue right shares to its shareholders.

Premier to issue 1:1.2 right shares?

“Premier may declare 1:1.2 right shares,” a source privy of the development informed.

Neco and Premier Insurance had signed a memorandum of understanding in November end for the merger.

Following the MoU, both the insurance companies had even filed an application for the LOI at the Insurance Board in December.

Nepal Stock Exchange Limited (NEPSE) then suspended the trading of the shares of both the companies due to the merger process.