Shareholders endorse Oando’s plan to divest subsidiaries, raise N80b additional capital

Shareholders endorse Oando’s plan to divest subsidiaries, raise N80b additional capital

Shareholders endorse Oando’s plan to divest subsidiaries, raise N80b additional capital

Shareholders of Oando Nigeria Plc have approved
the company’s plan to divest any or all
shareholding and investment in the downstream
business by way of sale, transfer or any other
form of disposition to enhance growth.
Besides, the company also received shareholders’
nod to raise N80 billion by way of rights issue to
existing shareholders.
The shareholders, who spoke at the 38th yearly
general meeting of the company held in Lagos
yesterday, also authorised the company’s
directors to appoint professional advisers and
other parties for the transactions.
Specifically, the president of Independent
shareholders Association of Nigeria, Sunny
Nwosu urged the company to do everything
within its powers to ‘clean up’ the balance sheet
and restore the company to profitability.
Similarly, the President, Progressive
Shareholders Association of Nigeria,
Boniface Okezie urged the company to
divest some of its assets and subsidiaries
and concentrate on few that add value to
the business.
He added that it would help reduce the
indebtedness to banks and boost the
working capital.
“Identify the buyers that would do the
business in a transparent and
accountable manner. There is no need
having 100 subsidiaries that are not
adding value to the bottomline.”
The Managing Director of the company,
Wale Tinubu explained that the company
would conclude the divestment of
downstream business within the next
two years.
He pointed out that the company has
continued to execute its strategic plan as
outlined in previous years, successfully
completing the first segment of the 10
km Greater Lagos Pipeline Ijora –
Marina extension, and signed an
agreement with an indigenous
contractor for the 9km extension of the
CHGC pipeline in Port Harcourt.
The company, according to him, has also
signed agreements with General Electric,
Nigeria to engage in various initiatives
to develop power generation projects,
compressed natural gas facilities and
mini Liquefied Natural Gas (LNG)
projects, aimed at aggressively
expanding its gas footprint in Nigeria
whilst remaining the gas provider of
choice to consumers.
“Oando steadily navigated the ups and
downs of the cyclical oil & gas market by
adapting quickly, recording key
operational milestones and being fiscally
innovative to enable its business
operations run efficiently. This led to an
82% increase in 2P reserves from 230.6
MMboe to 420.3 MMboe and an 11 fold
increase in production from 4,531 boe/
day in H1 2014 to 55,399 boe/day in H1
2015.”
Tinubu also explained that the company
also reset its crude oil hedge floor price
from an average of $95.35 per barrel to
$65 per barrel.
This measure, according to him, saved
the company $65 million in interest
payments over the remaining term of the
loan facilities used in its landmark
acquisition of ConocoPhillips Nigeria.
He told shareholders that the company
also upsized $91 million of its senior
secured facility from $215 Million to
$306 Million, and repaid its $100 Million
African Export-Import Bank
subordinated loan facility, thus reducing
its debt position from $900million as of
July 2014 to $500million as of October
2015.
He added that the company also
completed the construction of the Island
Jetty in Apapa, Lagos which will provide
a more efficient platform for product
receipt to all marketers and lead to
higher margin volumes with an
estimated $36 million expected annually
in revenue and $120 million demurrage
cost-savings for the sector per annum.
“Looking to the future, Oando’s E&P
subsidiary is expected to contribute $150
million on an annual basis translating to
expected dividends for shareholders
once its debt portfolio is cleared. It is
incumbent for us to change because the
whole world is changing. We cannot
continue to grow without reviewing our
balance sheet and selling what we fell is
unprofitable for the company.”
The company recorded a turnover of
N424.68 billion compared to N449.87
billion achieved in the corresponding
period of 2013 while loss after tax stood
at N179 billion compared to profit after
tax of N4.68 billion posted in 2013.
Similarly, the company for the six
months ended June 30, 2015 declared a
revenue of N60.32 billion against N55.67
billion posted in the comparative period
of 2014.