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Corporate deals

DEAL: Dufil Prima announces N30 billion Series 3 & 4 Commercial Paper

Dufil Prima has announced the issuance of its N30 billion Series 3 & 4 Commercial Paper Notes.

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Dufil Prima Foods Plc, Nigeria’s pioneer, and largest producer of noodles has announced the issuance of its N30 billion Series 3 & 4 Commercial Paper Notes Under the Company’s Commercial Paper Issuance Programme.

The paper will be listed on the FMDQ trading platform a few days after its allotment date.

Dufil, a leader in the Nigerian fast-moving consumer goods segment made this disclosure in an Investor Presentation sighted by Nairametrics today, the 19th of February 2021.

READ: United Capital Plc raises N15 billion through Commercial Paper

In line with the information contained in the document, the company plans to raise as much as N30 billion through its Series 3 notes, and an additional N30 billion from its Series4 notes under its Commercial Paper Issuance Programme.

However, offer for the N30 billion Series 3 & 4 Commercial Paper which will be officially issued on the 2nd of March 2021, and subsequently listed on the FMDQ trading platform, have been flagged open for interested participant today, 19th of February, the offer is expected to close by the 26th of this month.

READ: MTN Nigeria Communications Plc announces N100 billion commercial paper issuance

Key highlights of the Papers

  • The N30 billion Series 3 Commercial Paper comes with a 182-day tenor has an implied yield of 4%, and it is expected to mature on 31st August 2021.
  • The Register for the Series 3 paper will be closed from 24 August 2021 until the Maturity Date.
  • The N30 billion Series 4 Commercial Paper issued by Dufil under its Commercial Paper Issuance Programme with a 262-day tenor and a maturity date pegged at 25th of November 2021, comes with a 5% implied yield range.
  • The Register for the Series 4 paper will be closed from 18 November 2021 until the Maturity Date.

READ: Union Bank issues series 3 & 4 Commercial Paper, to raise N20 billion 

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Why this matters to the company?

According to information provided by Dufil, the company which is currently operating at a growth phase, requires debt funding to carry out its daily operations.

Hence, the Company relies heavily on debt to meet its growing working capital requirements, as it plans to use the papers to manage its short-term trading and liquidity requirements, given the current favourable interest rates. This will also minimize currency risk, about $12.5 million as estimated by the company, however, this cannot be eliminated due to the large proportion of raw material inputs that are imported.

It is important to note that the company has been able to curtail the escalation of debt in its debt portfolio in a bid to free up free cash flows for other operations, as the group will be taking advantage of the low-interest environment to pay back its existing high-interest short term loan.

Dufil, however, plans to refinance some of its outstanding debts through its commercial paper programme.

READ: NB Plc to raise additional N20 billion from its N100 billion Commercial Paper

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What you should know

  • Dufil benefits from diverse sources of debt financing, most of which are renewable annually, which includes commercial banks, development institutions and the capital market.
  • The company established a commercial paper issuance programme in March 2020 to refinance its dollar-denominated loan due for repayment in May 2020, to date, N15 billion in Commercial Paper has been issued with 270 days tenor out of which N1.5 billion is maturing in September 2020 and the remaining N13.5 billion is maturing in December 2020.

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Omokolade Ajayi is a graduate of Economics, and a certificate holder of the CFA Institute’s Investment Foundation Program. He is a business analyst, and equity market researcher, with wealth of experience as a retail investor. He is a business owner and a stern advocate of Financial literacy, who believes in the huge economic prospect of the Nigerian Payment channels and Fintech space.

1 Comment

1 Comment

  1. Stanley

    February 20, 2021 at 12:21 pm

    It’s really tough to do business in Nigeria. With the high exchange rate fluctuations and huge interest rates on bank loans, huge trade receivables and bad trade channel debts, many businesses seem to be finding it difficult to operate profitably. Even clear market leaders like Dufil don’t seem to be spared. The government really needs to step up on its responsibilities to local businesses, after all if more companies succeed, it means higher tax collections and lower unemployment pressures.

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Corporate deals

DEAL: Tangerine Life completes take-over of ARM Life Insurance Plc

Tangerine Life Insurance has concluded the acquisition of ARM Life Plc.

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Tangerine Life Insurance, a subsidiary of Verod Capital Limited has concluded the acquisition of ARM Life Plc.

This is according to a press release issued by the firm’s Head, Brand and Communications, Olabisi Adesokan, seen by Nairametrics.

The merger is expected to consolidate and optimize the unique strengths of both sides, both in the corporate and retail markets, creating a stronger and broader insurance and financial services platform that will be of immense benefits to all.

READ: Buhari reappoints Bala Usman as MD of NPA, reconstitutes the Board

Background of the deal

A decision to complete the acquisition of ARM Life Insurance Plc was reached at Tangerine’s Board Meeting held on 4th of March, 2020, where the provisions of section 131 of the Investment and Securities Act (ISA) 2007 was triggered.

Provisions in section 131 of ISA 2007 had empowered Tangerine Life Insurance to takeover ARM Life, following its 77.72% equity stake held in the latter, which translates to 7,392,953,710 ordinary shares.

In lieu of this, a decision to buy-out the remaining stake of 2,180,967,082 ordinary shares at N0.63 was ratified at the Board meeting and subsequently implemented.

READ: Report any employer without Group Life Insurance for employees – PenCom

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What they are saying

Commenting on the rationale behind the deal, the Managing Director of Tangerine Life, Livingstone Magorimbo said: “Integrating the businesses has presented us a tremendous opportunity to enhance our capabilities, improve operating efficiencies and grow our businesses.

“At Tangerine Life, we will continue to innovate, drive positive change within the insurance industry and create tremendous value for our customers towards effectively positioning our business to stay ahead of the next wave of industry evolution.”

On the other hand, a former Managing Director at ARM Life, Stephen Alangbo added that: “Innovation is paramount in ensuring customer satisfaction in today’s business landscape. We believe that the combination of both entities will ensure exceptional value creation for existing and new customers and partner.”

What you should know

  • According to the press release, the merger places Tangerine Life as the 4th largest life insurer in Nigeria and position it for future growth.
  • Tangerine Life Insurance Limited, formerly known as Metropolitan Life Insurance Nigeria Limited was incorporated on 19 August 2004 and licensed by NAICOM on 14 February 2007. It is principally engaged in the provision of group life, credit life and individual life products to over 12,000 blue-chip corporate and retail clients.
  • The Company is majorly owned by Oreon LMS Limited, a subsidiary of Verod Capital Growth Fund II, a US$115 Million private equity fund managed by Verod Capital Management Limited.

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Corporate deals

DEAL: FMDQ Exchange admits Parthian Partners Limited’s Commercial Paper worth N20 billion

FMDQ has ratified the admission of Parthian Partners Limited’s N20 billion Commercial Paper.

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Dangote cement, FMDQ changes company name, FMDQ Clear Limited, Securities and Exchange Commission

The Board Listings, Market and Technology Committee of FMDQ has ratified the admission of Parthian Partners Limited’s commercial paper worth N20 billion into the FMDQ Exchange platform.

This is according to a verified tweet by FMDQ Exchange, which reads; “FMDQExchange is pleased to announce the approval for the registration of the Parthian Partners Limited ₦20.00 billion Commercial Paper Programme on its Platform.’’

Prior to the recent admission, Nairametrics had earlier reported that a total of six (6) commercial papers valued at N22.29 billion have been admitted to FMDQ platform since the beginning of this year, with the latest being the admission of Coronation Merchant Bank’s CP series worth N3.63 billion.

Recall that since 2014, FMDQ Exchange has continued to champion the reform of Commercial Papers market, in collaboration with the CBN and through the deployment of key initiatives and strategies, part of which made it possible for the Exchange to cross the N1 trillion mark in 2018.

What this means

  • Nairametrics understands that Parthian Partners Limited, just like other issuers quoted on the FMDQ Exchange, will enjoy some value-driven services such as; gaining access to a wide range of knowledgeable and capitalised investors, enhanced liquidity among others.
  • The Commercial Papers will enable Parthian Partners Limited plug its capital shortfalls and meet up with its short-term liquidity, sustaining its business through the process.

What you should know

  • It is pertinent to note that Commercial Papers quoted on FMDQ’s platform are quoted on FMDQ and traded on the FMDQ-Bloomberg E-Bond Trading and Surveillance System
  • FMDQ Debt Market size as at close of business on 23rd of February, 2021 currently stands at N23.07 trillion.

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