Agribusiness firm, Ellah Lakes Plc, has hinted at plans to raise fresh capital through the issuance of new one billion shares to investors.
The plan, if followed through, will increase Ellah Lakes’ authorised share capital from 2 billion units to 3 billion.
In the same vein, the company’s board of directors will, at the same event, seek shareholders’ approval to mobilise additional capital through “debt, equity, or a mixture of both, or via public offering, private placement or right issue in such tranches, series or proportions and such prices or interest rates, within such maturity periods, at such dates and time and on such terms and conditions as may be determined by the directors, subject to the requisite approval of the relevant regulatory authorities.”
What this means: The capital raise is expected to facilitate Ellah Lakes’ aggressive investment drive and business diversification goal which, a fortnight ago, saw it acquire Telluria Limited in a debt-to-equity swap.
Although the notification sent by Ellah Lakes to the NSE did not disclose management’s intention as regards the proposed capital mobilisation, it is safe to say that the fund will be largely invested in the firm’s new expansion projects.
Managing director, Chuka Mordi, had earlier stated in an interview with Nairametrics that the company would explore latent opportunities in palm oil milling and refining. The idea is for Ellah Lakes Plc to transition from the low-value end of the oil palm industry to the high-value end of processed palm oil.
The company’s foray into new investments and business ventures suggests the company’s revenue sources are rapidly widening. With these, multiple streams of income are guaranteed which, in turn, will make the company profitable in the long run.
Why this matters: Existing and potential investors of Ellah Lakes now have various investment options to choose from; be it shares or other debt instruments the company is considering offering to them.
Moreover, the fact that the company is venturing into new businesses with the potential of huge returns on investment should delight investors. All things being equal, good returns from these new investments will translate to good dividend yield and help the stocks of the company appreciate.
Ellah Lakes’s share price ended today’s trading session at N4.26 per share.