The management of Forte Oil Plc on Friday said it was perfecting arrangements to raise the sum of N20 billion from the equity market to support operations and drive diversification strategy.
Omodayo-Owotuga, executive director, finance and risk management at the Forte Oil Group, said this at a news conference in Lagos.
Omodayo-Owotuga said that the oil marketer will use proceeds from the fund raising exercise to, among other things, expand its business and enhance working capital.
He said that the company has applied to capital market regulators, the Securities and Exchange Commission (SEC) and The Nigerian Stock Exchange (NSE) to approve the fund raising after getting a nod from the shareholders to raise fresh funds of up to N100 billion. The proposed capital raising will be done in tranches.
Forte Oil raised 9 billion naira in 2016 through bond issuance, said the company’s executive, adding that the company will focus on high margin businesses such as lubricants, Liquefied Petroleum Gas (LPG) and power to drive revenue generation.
He said that the company grew its lubricants business by 62 per cent in 2016, to 21 million litres from 13 million litres posted in 2015, having used up to $90 million to re-brand the company’s LPG facilities at Apapa, Abuja and Kano.
He said that the company would also strengthen its balance sheet through enhancement of working capital and efficient management of inventory and trade account receivables. The executive director said that the company was looking at the right offshore asset to acquire at the right price to increase market share.
He said that the company would optimise distribution channels as well as partner with telecommunication firms and financial institutions for effective distribution of its services.
Omodayo-Owotuga stated that Forte Oil would focus on mergers and acquisitions within the industry to increase its downstream business. He noted that downstream business contributed 89.9 per cent of the company’s revenue in 2016; power nine per cent, while upstream contributed 1.5 per cent.
Omodayo-Owotuga further said that downstream contributed 75 per cent in gross profit, power, 29 per cent and upstream, five per cent in 2016. He said that the company would continue to strengthen its power business, noting that Geregu power capacity had increased to 435 mega watts from 138 mega watts in 2016.
