Oando Plc, which is consolidating its leadership in the oil and gas industry has been raising funds in both debt and loans. However, going forward the company wants to rely more on equity financing, hence the proposal to raise its share capital to N7.5 billion.
The Board of the company will be seeking the approval of other shareholders for the capital increase at an Extra-Ordinary General Meeting scheduled to hold in February 18, 2014.
Commenting on the development, the Group Chief Executive of Oando Plc, Mr. Wale Tinubu said: “As we contemplate our world post the acquisition of Conoco Phillips (COP) Nigerian business unit, which will undoubtedly provide significant growth in size and scale in our upstream business, our mature mid-stream and downstream units continue to retain dominant positions in their market space whilst not requiring material equity infusion. In our bid to maximize long term shareholder value, it is necessary to optimise our balance sheet by funding our operations where necessary through equity as opposed to expensive sources of debt.”
According to Tinubu, the first phase of the this long term plan will seek to raise further capital by way of rights of N50 billion expected to be concluded by end of second quarter of 2014.
He explained that the proceeds of the planned Rights exercise will be utilised towards debt reduction and meet Oando’s immediate working capital needs. Tinubu emphasised that none of the proceeds raised will be allocated to the closure of the COP acquisition, adding that the company does not contemplate any additional equity issuance in 2014.
He re-emphasised the company’s three pronged approach of transformation, debt reduction, and substantially increasing shareholder value.
“We are working arduously to provide the ideal platform to ensure our readiness for further transformation, as we undoubtedly will generate stronger cash flow, but we also realize the need to minimize our cost of capital to increase our returns to our shareholders. We implore all shareholders to continue to offer their full support as we continue to build sub-Saharan Africa’s leading energy company together,”