Oando Plc last Thursday commenced the process of raise N54.579 billion from the capital market following the opening of its Rights Issue of N4.548 billion to existing shareholders.
The offer, being made at N12 per share on the basis of two new shares for every one share already held, is expected to close on February 6, 2013.
Net proceeds of the offer would be used to repay part of N60 billion syndication loan used to acquire upstream assets and swamp drilling rigs among others.
Specifically, the funds would be used to repay part of loan used to acquire upstream assets and swamp drilling rigs, part-financing of acquisition of upstream and midstream assets by Oando’s upstream subsidiary, Oando Energy Resources and investment in working capital to support increased level of business.
Vetiva Capital Management Limited is the lead issuing house to the offer while FBN Capital Limited and FCMB Capital Markets Limited are joint issuing houses.
Speaking on the rights issue last week, Group Chief Executive, Oando Plc, Mr. Wale Tinubu, said that now that the company had obtained the necessary regulatory approvals for the capital raise, they were at the final stages in the execution of their overall strategy to increase their exposure to the upstream sector whilst reducing the dependence on the downstream.
“In 2010, we raised N21.1 billion through a rights issue, it was a highly successfully event, as it closed 28 per cent oversubscribed and we look forward to a similar outcome in this exercise. We count on the consistent support of our shareholders to seize the opportunity to take up their rights and benefit from the higher margin value creation the upstream offers,” he said.
Speaking on the opening of the issue on Monday, Tinubu said they were happy to announce the opening of our rights issue offering, in line with their corporate strategy for balance sheet optimisation and the financing of growth initiatives in the upstream sector.
“Pursuant to the recent signing of agreements by our affiliate OER with ConocoPhillips, to acquire their entire Nigerian Asset base for $1.79 billion plus customary adjustments, OER will be transformed from a small size oil company to a midsize oil producer.
“The successful outcome of the rights issue will position Oando to increase value for shareholders in the upstream through focused portfolio growth in production, cash margins and improved returns on capital deployed. We count on the consistent support of our shareholders to seize the opportunity to take up their rights and benefit from the higher margin value creation the upstream offers,” he said.