Flour Mills Nigeria Plc has closed its application list to raise about N12 billion in the 8th series of its N100 billion Commercial Paper (CP) programme.
The company offered the 270-day CP with an effective yield of 13.10 percent and a discount rate of 11.9427 percent.
Nairametrics understands that the CP which will be issued on Thursday, May 30, 2019, has a minimum subscription of N5 million. Thereafter, it would be issued in multiples of N1,000.
How the fund will be deployed: The company will use the net proceeds from the commercial paper issuance to support its short-term funding.
Understanding what CP entails: A Commercial Paper is an unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts payable and inventories and meeting short-term liabilities. Maturities on commercial paper rarely range longer than 270 days. Commercial paper is usually issued at a discount from face value and reflects prevailing market interest rates.
Commercial paper is not usually backed by any form of collateral, making it a form of unsecured debt. As a result, only firms with high-quality debt ratings will easily find buyers without having to offer a substantial discount (higher cost) for the debt issue. Because commercial paper is issued by large institutions, the denominations of the commercial paper offerings are substantial, usually $100,000 or more. Other corporations, financial institutions, wealthy individuals, and money market funds are usually buyers of commercial paper.
About the company: Flour Mills of Nigeria Plc engages in the flour milling business in Nigeria and internationally.
It operates through Agro Allied, Food, Packaging, Port Operation and Logistics, and Real Estates segments.
The company was incorporated in 1960 and is headquartered in Lagos, Nigeria. Flour Mills of Nigeria Plc is a subsidiary of Excelsior Shipping Company Limited.
Flour Mills of Nigeria Plc is currently trading N13.50 on the floor of the Nigerian Stock Exchange (NSE).