Dangote Cement Plc at the weekend launched bids for its N100billion 5-year bonds issuance in a bid to raise a medium-term debt to pay off existing debt, financial advisors to the debt issue has said.
Dangote had last week announced serious plans to obtain regulatory approvals to raise the medium-term debt. Dangote Cement, owned by Africa’s richest man, Aliko Dangote did not disclose the amount it intends to raise, but the firm said the proceeds from the debt issuance would be deployed to refinance existing short-term debt previously applied towards its cement expansion projects.
As a matter of fact, FSDH, an investment banking group said the company launched the bonds – a ₦300 billion Debt Issuance Programme. It said, “Dangote Cement plc has started offering its Series-1 Fixed Rate Senior Unsecured Bonds (5-years) with a target size up to ₦100 billion under its ₦300 billion Debt Issuance Programme. The offer has started on April 3 and with an offer closing date of April 14, 2020. The pricing range for the bond is 12.25-12.50 percent. Subject to demand and pricing, the issuer may allot up to ₦300 billion of bonds,” the investment banking group said in a note to clients.
At the regulatory filing to the Nigerian Stock Exchange (NSE) last week, Dangote with an installed capacity of 45.6 metric tons across operations in 10 African countries said the proceeds of the debt will also be used for working capital and general corporate purposes. “DCP intends to issue its maiden series of bonds (the “series 1 bonds”) imminently, subject to obtaining regulatory approvals and favorable market conditions,” the firm, which accounts for a fifth of the NSE capitalisation said in the communication.
“Book building for the series 1 bonds will commence following approval of the transaction by the Securities and Exchange Commission,” it said. The cement form said it has already obtained the approvals of its board of directors to access the capital markets for the medium-term debt funding. The country’s largest company by market capitalisation has last year said it will plan to repurchase up to 10 percent of its issued share capital.
In January, Shareholders of Dangote Cement unanimously gave their consent to the company to repurchase 1.70 billion of its shares, representing about 10 percent of its issued stocks. “The relevant shares will be repurchased out of the profits or the company and any such number of shares bought under the programme is required to be canceled in accordance with the SEC rules and the Nigerian Stock exchange 2015 (NSE Rulebook), which will consequently lead to a reduction in issued share capital,” the company said in a filing. In February, Dangote Industries Limited sold a total of N1.45 billion from its holdings in Dangote Cement Plc, one of his prime investments. He sold off 8,590,640 shares in Dangote Cement Plc at N169 per share. Dangote Company, Dangote Industries Limited holds the majority stake in the cement firm, which has plants across some African countries.