February 15, 2012
The Nigerian Stock Exchange (NSE) last week listed N4.6 billion bonds floated by Tower Funding Plc on its daily Official list.
The bonds, series one tranche A and series one tranche B, were raised by Tower Aluminium Group from the capital market under its N9 billion (Medium Term Note) last year.
The company issued N3.630 billion bond due on September 9, 2018 (series one tranche A) with a floating rate of Monetary Policy Rate(MPR) plus seven per cent and the N1 billion MPR plus five per cent floating rate bond due September 2018 (series one tranche B).
The funds were raised through a book-building exercise spear headed by Dunn Loren Merrified (DLM) Limited, which acted as financial adviser, issuing house and lead book runner to the transaction.
The N9 billion MTN programme is undertaken by Tower Funding Plc, which is a captive finance vehicle for the Tower Aluminium Group.
The Series N3.63 billion was 331/3 guaranteed and assigned an ‘A-’rating by Global Credit Rating and DataPro Limited while the N1 billion bond was 100 per cent guaranteed with a provisional rating of AA- and AAA from Global Credit Rating and DataPro Limited respectively.
According to the Chief Executive Officer(CEO) of DML, Mr. Sonnie Ayere, the proceeds of the bond were applied towards the funding of the member companies of the Tower Aluminium Group comprising: Tower Aluminium (Nigeria)Plc; Queensway Aluminium Limited; Asaba Aluminium Limited; Tower Roofing Systems Limited; Borno Aluminium Limited and Kolorkote Nigeria Limited.
“The rich history of the Tower Aluminium Group spanning over 50 years in Nigeria contributed in no small measure to the success of the Series 1 bond issuance,” Ayere had said.
Ayere noted that the bonds were the first internationally guaranteed bond by a real sector corporate entity in Nigeria.
The guarantee was given by GuarantCo Limited, a development finance institution regulated by the Financial Services Commission (FSC) of Mauritius with the key objectives of encouraging private sector involvement in the local currency financing of infrastructure projects and promoting local capital market development in low-income countries.
Chairman of GuarantCo, said: “This ground-breaking financing is a material advance in developing the local corporate bond market. Nigerian companies deserve the same access to long term funding from their capital markets as in other major economies and we look forward to more issuers accessing the market.”
Specfically, the Tower Group had explained that the proceeds of the bonds would be used for the refinancing of maturing bank debt obligations utilised by the Group to build the multi-million-dollar aluminium factory at Otta in Ogun state.
According to the company, the factory has been designed to convert scrap aluminium into new and usable aluminium hence reducing its reliance on imports and therefore significantly reduces cash flow vulnerability due to exchange rate fluctuations.