Flour Mills of Nigeria Closes N40 Billion Rights Issue

Goddy Egene

Flour Mills of Nigeria (FMN) Plc yesterday closed its Rights Issue 1,476,142, 418 ordinary shares of 50 kobo each at N27 per share.

The offer, was made to existing shareholders at the ratio of nine new ordinary shares for every 16 ordinary shares to raise about N40 billion additional capital to boost its operations.

The company has asked all receiving agents to remit all returns , saying all returns not receive by Wednesday February 28, 2018, may not be accepted.

The Chairman of FMN, John Coumantaros, had said the Rights Issue was undertaken primarily to pay down some of the company’s outstanding short-term debt in order to reduce its finance costs which have increased significantly in recent times, and reshape its balance sheet.

Similarly, the Group Managing Director of the company, Mr. Paul Gbededo said: “The Rights Issue is part of our strategy to grow and build long-term value for all stakeholders. The proceeds from the Rights Issue will be used to strengthen the company’s capital base by deleveraging our balance sheet, supporting our working capital needs and positioning the company to exploit value-accretive opportunities, whilst giving greater operational and financial flexibility to ensure business growth and continuity.”

According to him, the vision and forward looking strategy of the company is to have sustainably secure supply chain; increase local content in the FMN business portfolio; cater to the needs and aspirations of Nigerian demographics and improving performance in a challenging operating environment.

Speaking on why the investing in FMN is profitable, Gbededo said: “The company has an integrated business model, proven management team, extensive distribution network, strategic initiatives along the value chain, exciting new product development, import substitution, balance sheet optimisation, market leadership and strong brands.”
It is believed that the proceeds from the Rights Issue would further enhance the performance of the company in the years ahead.

FMN has already recorded an improved performance for the half year ended December 31, 2017.
FMN recorded a revenue N427.5 billion in 2017, up by 10 per cent from N389.9 billion recorded in the corresponding period of 2016. Finance cost remained high, standing at N25.157 billion, up by 43.1 per cent from N17.756 billion in 2016. FMN ended the year with Profit before tax (PBT) of N19.50 billion, showing a growth of 89 per cent from N10.3 billion in 2016. Profit after tax (PAT) grew slower by 79 per cent to N13.27 billion, compared with N7.39 billion.