Starcomms Plc is seeking its shareholders’ approval to allow the injection of the much needed capital; technology; and expertise from Capcom Limited to rejig the troubled operator.

The shareholders nod at the company’s 2011 annual general meeting and court-ordered meeting scheduled for December 28, would pave way for the creation of the biggest CDM operator in the country which promises better returns on investment for all the stakeholders.

Starcomms said yesterday it is posting shareholders documentation relating to Capcom Limited proposed investment into the Company.

Capcom is the special purpose vehicle solely created to make an equity investment into Starcomms and was established in 2012 with money raised from investment and hedge funds, family offices and industry partners with years of commercial experience in emerging markets, especially Africa.

Starcomms has recently faced severe operational and financial challenges on account of the shifting competitive landscape in Nigeria’s telecommunications industry.

The challenges have resulted in the company operating with an unsustainably high level of debt and a stagnating operating performance.

As a consequence, Starcomms faces  severe liquidity crisis and the board of directors has therefore considered options available to introduce new capital into the Company.

Without this new capital the company will fail as a going concern and shareholder value will be lost.

Olusola Oladokun, interim CEO of Starcomms Plc said,  “Starcomms has experienced significant challenges over the past two years, at the heart of which have been the changing competitive and operational dynamics of the Nigerian telecommunications industry, especially in the voice business.

“As a result, the Board of Directors has been considering a number of options to re-position the Company for growth. After careful consideration, we believe that the investment by Capcom, which will provide the capital required for continued operations as well as enabling investment in new technology, combined with the injection of new spectrum and the CDMA assets of Multi-links, creates the best possible platform for Starcomm’s future. We strongly recommend – and look forward to – the transaction being approved by our Shareholders.” He added.

The new Starcomms will provide a strong and stable platform for the future, with the newly invested capital allowing the Company to service current debt obligations and so remain a going concern whilst enabling it to invest for future growth.

 Capcom will inject US$98 million of cash and US$112million of independently valued assets into the Company with the proposed rights issue subsequently raising further cash for use as working capital.

Ademola Eleso, Capcom’s CEO designate for Starcomms post transaction completion, said: “the opportunities for data providers in Nigeria have only started to be tapped. By combining additional spectrum from Multi-Links and MTS with the existing network and subscriber base of Starcomms we believe we can quickly create Nigeria’s leading provider of mobile broadband through an industry-leading “4G”-LTE network. This can only be good news for Starcomms’ loyal customers, partners, staff and Shareholders and I and our whole team look forward to the challenge of building Nigeria’s new Broadband internet champion.”

The new Starcomms will  also provide access  following completion of the transaction, to a contiguous 20MHz of spectrum in the 1900MHz range, the largest such allocation of any telecoms provider in Nigeria following the injection into the Company by Capcom of the spectrum allocations of Multi-Links and MTS.

This aggregation of spectrum will enable Starcomms to deliver a complete range of mobile broadband services using new generation IP-enabled, highs peed broadband 4G/LTE technology.

According to the Capcom, the new business will be a focused and strong business model based on the Company’s core offering, data services, the highest margin per user segment in the industry.

It is promised a market driven, fair and transparent recapitalisation solution for the Company that offers opportunities for Shareholders as the company develops as well as afresh and experienced management team and a new Board of Directors with extensive experience in telecoms globally and with a proven culture of adherence to corporate governance best practice and a track record of risk management excellence.

The Transaction will be effected through a scheme of arrangement  to be followed by a Private Placement and a Rights Issue.

The Scheme will involve the cancellation of N3,448,646,872 in the Company’s share capital, comprising 6,897,293,744 ordinary shares of 50 kobo each, and the subsequent issuing of 662,550,000new, fully paid up ordinary shares to Capcom, constituting 90.5% of the post scheme-reorganised, issued share capital.

As part of the Transaction, Capcom will inject a combination of assets and cash into Starcomms worth $210 million.

Part from the shareholders, the transaction is also  subject to obtaining various regulatory approvals including those of the Federal High Court, the Securities and Exchange Commission and the Nigerian Communications Commission which has already confirmed its “approval-in-principle”.

On the basis that the scheme and special resolutions are duly voted on and approved by Shareholders it is intended that following the necessary regulatory approvals Capcom will take control of Starcomms, install new management and nominate a new board of directors.

The company will be embarking on an investor roadshow to present the transaction to Shareholders, the dates and venues for which will be communicated to them directly. For those Shareholders unable to attend in person the Presentation will also be available to download on the investor relations section of the Starcomms website at:ir.starcomms.com