Stock & Analyst Updates | |
Stock & Analyst Updates | |
4658 VIEWS | |
![]() |
Thursday, April 04, 2019 / 10:17AM /
By Reuters
Nigerian oil company Oando
PLC aims to raise fresh capital over the next
two years and repay debt used to acquire Conoco Phillips’ Nigerian assets, its
chief executive Adewale Tinubu told Reuters.
Oando has transformed itself in the past few years from a fuel retailer
to oil producer and now competes with multinationals such as Shell and
ExxonMobil, but its growth has been largely built on debt.
It 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. It has posted losses including a record $1.10 billion
loss in 2014.
Tinubu said Oando
PLC 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 total debt of
$300 million.
Oando’s growth plan is to continue to pursue acquisitions as multinational
oil companies sell assets, Tinubu said but added that he would take on new
deals after paying down debt.
Exxon Mobil is weighing the sale of its Nigerian
oil and gas fields for up to $3 billion to focus on new developments in U.S.
shale and Guyana, industry and banking sources said.
“Our expectation is that over a four-year horizon we will no longer have
long term debt,” Tinubu told Reuters by email.
Going Concern
In 2016, Nigeria’s central bank gave lenders a deadline to reach a deal
to resolve Oando’s debt issue, leading to a 94.6 billion
naira loan restructuring including asset sales.
Last week Oando’s losses narrowed to 18.3 billion naira
($59.8 million) for 2018 while its auditor Ernst & Young questioned its
“going concern” status, saying that its current liabilities were in excess of
its current assets.
Oando said it would reclassify some current liabilities as long-term
liabilities to remedy its working capital by June and swap 27.5 billion naira
of debt into equity, it said in a note to its 2018 accounts.
It also plans to sell up to $200 million via a rights issue by October
and cut its stake in its upstream unit to raise $275 million in 2020, Oando said in its accounts.
Tinubu said he was confident with the capital raising initiatives and
that over the next 24 months Oando would raise funds as plans were far advanced.
Shares in Lagos-listed Oando, which are down 86 percent from their peak of 33.47 naira in 2014, rose
3.2 percent on Wednesday to value the company at 58.43 billion naira.
Credits
This post Nigeria's Oando aims to raise fresh capital, cut debt: CEO authored by Chijioke Ohuocha of Reuters.com, first appeared in Reuters on Wednesday, Apr 03, 2019.
Related News on Topic
1.
Auditors Question Nigeria Oil
Driller’s Ability to Stay Afloat – Bloomberg Apr 02, 2019
2.
Oando Plc Announces FYE 2018
Results, Posts N28.8 Billion Profit-After-Tax
3.
OANDO Declares N28.79bn PAT in
2018 Audited Results (SP:N5.65k)
Related News
1.
OANDO Declares N28.79bn PAT in
2018 Audited Results (SP:N5.65k)
2.
Oando Plc Announces FYE 2018
Results, Posts N28.8 Billion Profit-After-Tax
3.
OANDO Declares
N10.39bn PAT in Q3 2018 Results (SP:N5.05k)
4.
OANDO Declares
N8.50bn PAT in Q2 2018 Results,(SP:N4.85k)
5.
OANDO to Hold
its AGM on Friday, July 27, 2018
6.
OANDO Declares
N4.19bn PAT in Q1 2018 Results,(SP:N9.15k)
7.
OANDO Declares N19.77bn Profit
for the Year 2017,(SP:N9.15k)