Dangote Cement Raises N150bn as Bond Offer Records Oversubscription

0

Goddy Egene

Dangote Cement Plc has raised a total N150 billion in its debut bond issuance in the nation’s capital market. The company had accessed the market with N100 billion Series 1 Fixed Rate Senior Unsecured Bonds due April 2025 under its N300 billion Bond Programme. However, the offer was oversubscribed by N50 billion. The bond has a coupon rate of 12.50 percent.

Book building with respect to the debt instrument commenced on April 3 and closed on April 15, 2020. Despite current market headwinds due to the COVID-19 pandemic, the transaction was well received. It attracted investors such as domestic pension funds, asset managers, insurance companies, banks and international fund managers.

Dangote Cement explained that the debt would enabled it to lower its average cost of debt and extend the average maturity of its debt, noting that it intends to use the net proceeds of the offering to refinance existing short-term debt previously applied towards cement expansion projects, working capital and general corporate purposes.

Commenting on the bond issuance, Chief Executive Officer of Dangote Cement, Michel Puchercos, said: “This landmark transaction is the largest ever bond issuance by a corporate issuer in Nigeria. It allows us to further broaden our sources of funding by accessing long-term debt at competitive costs from the capital market and builds further on the success of our domestic commercial paper programme. The success of this transaction, in the current challenging environment ,illustrates investors’ continuous confidence in Dangote Cement’s strategy, strong cash generation and solid credit profile.”

The bonds would be listed on the Nigerian Stock Exchange (NSE) and the FMDQ Securities Exchange Limited, and for the first time in the history of the Nigerian debt capital markets, investors will have the option of lodging securities with either the Central Securities Clearing System or the FMDQ Depository.

Dangote Cement Plc last month announced a dividend of N16 per share for the year ended December 31, 2019 following the release of its audited results for the year.

The leading cement firm recorded a revenue of N891.671 billion in 2019, compared with 901.213 billion in 2018. Financing cost rose from N49.778 billion to N57.673 billion, while profit before tax fell from N300.8 billion to N250.47 billion. Profit after tax stood at N200.5 billion, done from N390 billion in 2018.