Flour Mills plans $232mn Bond for expansion

Flour Mills plans $232mn Bond for expansion

 

 

Nov 18, 2010
By  Michael Eboh
 
 
Flour Mills of Nigeria Plc, which processes grain and sells cement, will offer 35 billion naira ($232 million) of bonds this month and use the proceeds to build a sugar refinery in Lagos.
 
The sale forms part of a 70 billion-naira debt-issuance program that shareholders approved in August, the Lagos-based company said today in a presentation to investors. The book- building for the sale of the bonds, which will yield 10 percent to 12 percent, is expected to be completed this week, Pabina Yinkere, an analyst at Lagos-based Vetiva Capital Management Ltd., said by e-mail today.
Nigeria, Africa’s most populous country and the continent’s biggest oil producer, is expected to import 1.4 million metric tons of raw sugar in 2010-11, up from 1.3 million tons in 2009-10, according to an April 13 estimate by the Foreign Agricultural Service of the U.S. Department of Agriculture. Local production is less than 5 percent of total consumption, according to the agency.
 
The refinery will have a capacity of 750,000 metric tons a year, and Flour Mills plans to develop a 15,000-hectare (37,000- acre) sugar-cane plantation, it said, without adding where the fields will be located. The two projects are scheduled for completion in 2012.
 
The investment units of United Bank for Africa Plc, the country’s largest lender by branches, Zenith Bank Plc and Guaranty Trust Bank Plc are helping with the sale.
 
Dangote Industries, a group controlled by billionaire Aliko Dangote, is Nigeria’s largest domestic investor in the business, the USDA said. Its interests includes Dangote Sugar Refinery Co., the country’s largest refiner, which processes raw sugar imported from Brazil, and Savannah Sugar Co., which grows sugar cane in the northeastern state of Taraba, the U.S. agency said.
 
Flour Mills also plans to invest part of the bond proceeds in a new mill that will produce 1,000 metric tons of soft wheat a day and another for the production of 500 metric tons of pasta daily, the company said in the presentation.
 
Net income for the period through September increased 20 percent to 5.85 billion naira compared with a year earlier, the company said in a statement e-mailed by the Lagos-based Nigerian Stock Exchange on Nov. 12. The bourse described the period as the second quarter through September.The share rose by 25 kobo, or 0.4 percent, to 68.5 naira at the close of trading on the Lagos bourse today.
 
SOURCE: VANGUARD

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