CEO, Oando Plc, Wale Tinubu, has revealed plans to raise fresh capital over the next two years and acquire more oil assets after paying down its debts. According to Tinubu, the oil giant will no longer have long term debts in the next four years.
Oando bought Conoco Phillips’ Nigerian assets for $1.5 billion in 2013, but high financing costs coupled with lower oil prices hit profit, leaving it unable to repay its debt.
Tinubu said Oando has paid over 77 percent of the acquisition debt and plans to pay off the rest in 12 months, which would allow it to resume dividend payments. He said Oando would be left with a total debt of $300 million
In its 2018 results, the company revealed strategic initiatives aimed at improving its working capital and cash flows. Part of which is to reclassify up to N38.4 billion of current liabilities into long-term liabilities thus creating a substantial remedy to the negative working capital position. According to the company, the implementation of this initiative started in 2018 and will be completed between April 2019 and June 2019.
Restructure the Corporate Loan Facility at Oando Energy Resources to ensure the loans are default free and fully compliant with credit agreements, achieve a tenor extension of up to two years, reduce debt service requirements in the near term. Refinance an approximate N5.4 billion credit facility provided by one of the bilateral lenders. Sale of the Company’s shares in Oando Energy Resources to raise up to N84 billion in 2020 in order to prepay debt across the Group – Sale of the Company’s 25% stake in Glover BV to raise up to $41 million over the next 12 months.
The Company has entered into a Sale and Purchase Agreement with the buyer and proceeds will be applied towards repayment of debts across the Group. – Converting up to N27.5 billion of the Group’s current Debt into equity. the Company has begun the conversion process by engaging with the Security and Exchanges Commission. Recapitalization by raising up to $200 million through a rights issue by October 2019.
An analysis of the company’s result for the full year ended 31 December 2018 shows turnover increased by 37 percent to N679.5 billion compared to N497.4 billion in 2017, buoyed by higher oil prices resulting in higher oil revenue and higher gas prices, which led to higher gas revenues. In addition, gross profit grew by 9 percent to N96.3 billion, from N88.1 billion in 2017.
The Group borrowings for the period stood at N210.9 billion, 11% decrease from the full year in 2017 at N237.4 billion in its upstream borrowings reduced by 21% to $255.6 million compared to $324.6 million in 2017. Oando debt rose to $2.5 billion after acquiring oil and gas assets from U.S giant ConocoPhillips.
Speaking on the sidelines of an Energy Summit in Abu Dhabi last year, Tinubu said the energy company plans an increase of 50,000 barrels daily over the next three years, at which point the company’s total production would more than double from current levels to 90,000 barrels daily.
OLUFIKAYO OWOEYE
