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BUA Cement Succeeds with N115bn Bond Issuance
•Issue oversubscribed by 37%
BUA Cement Plc, one of Africa’s largest cement companies, has successfully concluded its N115 billion Series 1 Fixed Rate Senior Unsecured Bond Issue under the company’s maiden N200 billion Bond Issuance Programme.
With this development, BUA Cement’s bond becomes the largest ever corporate bond issued in the Nigerian debt capital markets (DCM) and signposts growing investors’ confidence in Nigeria’s second largest cement company.
The N100 billion Series 1, seven-years 7.5 per cent Fixed Rate Bond, due in 2027, was subscribed to the tune of N137.82 billion. But in accordance with Rule 323(21) of the SEC Rules and Regulations, 2013, the board approved the absorption of excess funds, not exceeding 15 per cent of the offer of N100 billion, which translates to N15 billion and N115 billion in its entirety.
According to the company, an application will be made to dual-list the bonds on the Nigerian Stock Exchange (NSE) and FMDQ Securities Exchange (FMDQ) upon receipt of approvals.
Speaking on the significance and success of the Series 1 issue, Chairman, BUA Cement Plc, Abdul Samad Rabiu, said: “This is the largest corporate bond offering in the history of Nigeria’s DCM. Last year, we made a strategic decision as a proudly Nigerian company to list BUA Cement on the Nigerian Stock Exchange (NSE). This was in line with our core strategy to continue seeking out viable investment and growth opportunities within Nigeria. This bond issuance, a first by BUA Cement, demonstrates our confidence in Nigeria’s debt capital markets as well as continued investor confidence in the BUA Cement business model, our management team, and long-term strategy, all supported by strong credit ratings. We remain committed to unlocking opportunities within the industry for Nigeria.”
Also commenting, Chief Executive Officer, BUA Cement, Yusuf Binji, said the success of the first series in the BUA Cement Bond Issuance Programme underscored the strength of the BUA Cement brand.
“The transaction, being the largest corporate bond issuance in the history of Nigeria’s DCM, reiterates the strength and acceptance of the BUA Cement brand and the trust placed by stakeholders in the company’s strong cash generation capacity, credit profile and strategy driven by a well experienced management team. Diversifying and extending the duration of our funding sources with the inclusion of this bond, at a competitive rate, will further enable us to achieve our strategic objectives and vision,” he stated.
The BUA Cement Series 1 Bond, which has a three-year moratorium period and to be amortised evenly from year four, is embedded with a call option, exercisable only after 48 months from the issue date.
BUA recently announced its intention to increase its production capacity to 20 million metric tonnes per annum (mtpa) by 2022. In addition, its newest three million mtpa plant in Sokoto currently undergoing construction is expected to be ready in 2021.
BUA Cement Plc is Nigeria’s second largest cement company and the largest producer in its North-west, South-south and South-east regions; with a combined installed capacity of eight million metric tonnes per annum (mtpa) and with plans underway to increase existing capacity to 20 million mtpa by 2022. With its headquarters in Lagos, BUA Cement operates strategically from Okpella, Edo State and Kalambaina, Sokoto State.
The shares of BUA Cement closed 2020 as the sixth highest price gainer at the stock market, fetching investors capital gain of 121 per cent.