Flour Mills of Nigeria plans to start marketing a share sale to existing investors aimed at raising N39.86 billion today as the company continues to intensify its expansion plans.
The flour and pasta maker will offer 1.47 billion shares at N27 apiece, an 18.2 per cent discount to Thursday January 11 market price of N33.
It will offer nine new shares for every 16 already held via the rights issue.
The company says proceeds of the right issue will be used to reduce debt and strengthen working capital position.
The Rights Issue is part of our strategy to grow and build long term value for all stakeholders, according to Paul Gbededo, the Group Managing Director of the company, at the signing ceremony held in Lagos.
“Proceeds from the Rights issue will be used to strengthen the Company’s capital base by leveraging on our balance sheet, supporting our working capital needs and repositioning the Company to exploit the value accretive opportunities,” said Gbededo.
Companies in Africa’s largest economy are tapping the capital market to raise funds in order to underpin balance sheet after a sharp drop in oil price and severe dollar shortage tipped the nation in its first recession in 25 years.
However, the country existed the recession as the economy expanded by 0.55 percent and 1.40 percent in the second and third quarters of 2017, according to the National Bureau of Statistics (NBS).
The International Monetary Fund (IMF) has said that the economy will grow by 2.10 percent in so far as the country can consolidate on oil production and foreign exchange policies.
For the six months ended September 2017, Flour Mills net income surged by 44.60 percent to N9.35 billion as against N2.88 billion the previous year.
Sales spiked by 16.90 percent to N298 billion the period under review, thanks to a contribution from food segment as the company continues to consolidate its position in the Nigerian market that crave for consumption.
Earnings before Interest and Taxation (EBIT) surged by 53.51 percent to N29.41 billion in the period under review as against N10.27 billion the previous year.
Analysts are of the view that the ease in the foreign exchange market since the central bank introduced the Investors’ and Exporters’ (I &E) window could underpin the Nigerian Millers’ performance in 2018.
The Central Bank of Nigeria’s (CBN), Purchasing Managers’ Index (PMI) report published last week shows that the PMI (an index used to gauge the economic health of the manufacturing sector) for December hit a record high of 59.3 points compared with 55.9 points in November.
Flour Mills shares, which climbed 57 per cent in 2017, has gained 15 per cent so far in January, valuing the company at N87 billion.
BALA AUGIE
