N94.6bn Debt Restructuring Deal Lifts Oando Shares


By Goddy Egene

Shares in Oando Plc rose 13 per cent last week as investors reacted positively to the news of the restructuring of the company’s debt into a N94.6 billion five year facility by 10 banks.

Investors had seen Oando as highly geared, a perception that has made its shares unattractive at the stock market despite its low price. However, the demand for the shares increased last week following the debt deal the integrated energy firm had with the banks. The equities rose by 13 per cent from N61.16 to N17.00.

A shareholder of the company and member of Independent Shareholders Association of Nigeria (ISAN), Mr. Moses Igbrude said the news of debt restructuring was a very exciting one and it is capable of improving the fortunes of the company, which would eventually lead to returns to shareholders.

Oando has made significant investments in the past few years. Unfortunately, the developments in the oil sector and economy at large made the company  to be unable to extract value from those investments. Despite the poor returns from the investments, the company continued to pay high interest. But the restructuring will bring some relief. To me as a shareholder, this is a very positive development,” Igbrude said.

Oando last week announced the  conclusion of a N94.6 Billion facility provided by 10   financial institutions in Nigeria. The financing, coordinated by the mandated Lead Arranger, Access Bank Plc, is a five-year Medium Term Note  at Nibor + 200 bps as a crucial part of our strategic restructuring plans.

Commenting on the transaction, Group Chief Executive, Oando Plc, Mr. Wale Tinubu, said: “In a bid to return to profitability in 2016, I am happy to announce the successful completion of restructuring our overall debt profile into a N94.6 billion medium term, five year consolidated facility, with a 3-year moratorium on principal. This is the pivotal leg in our group restructuring plan of growth via the upstream business, deleverage via the disposal of $350 million in assets’ value in 2016 and our return to profitability in 2016, driven by our dollar earning oil export and  trading activities. The company now stands diversified with higher weighted dollar denominated earnings, an optimised and restructured balance sheet with lower cost of capital and longer tenors. With the upturn in the global oil prices to levels above $50 per barrel, we now look forward to the successes of 2016, having ridden out the storm.”

According to him, the banks involved in the financing are; Access Bank, Diamond Bank, Ecobank,  FCMB, Fidelity Bank, Stanbic IBTC Bank, UBA Bank, Union Bank and Zenith Bank.

“The transaction further signifies the solid commitment from Nigerian banking institutions to support sustained growth and development of the Nigerian oil and gas sector in these trying times. Oando Plc will continue to exercise strong financial discipline in meeting obligations and our debt covenants,” Tinubu stated.