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Fresh indications have emerged that Geregu Power Plc Chairman, Senator Abdul’aziz Yari, personally funded the company’s N6.03 billion outstanding bond obligation to protect investors and prevent the dispute from affecting the company’s operations.
Yari, in a statement seen by Nairametrics, said his intervention was aimed at protecting bondholders, preserving investor confidence and safeguarding the interests of Geregu Power and its shareholders.
In the statement personally signed by him, the chairman said the bond obligation was issued, and the underlying arrangements were made under the company’s former owners and management, before the current ownership and Board assumed responsibility.
What the Chairman is saying
Yari said discussions are ongoing with the former owners and management over the circumstances surrounding the obligation and its eventual resolution.
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- “I have decided, in my capacity as Chairman, to personally step in and provide the funds required to address the immediate outstanding bond obligation.”
- “This is not an admission that the obligation is personally mine, nor is it a judgement that the current Board or management created this problem.”
- “Confidence, once shaken, is expensive to rebuild. I would rather act early than watch that happen.”
- “To our bondholders, our shareholders, and everyone who has built something lasting with Geregu Power: this company’s obligations will be honoured, its governance will remain sound, and its future is not in question.”
Yari said his immediate priority is to ensure the bond issue does not unsettle investors, undermine confidence or interfere with the company’s operations.
The chairman said his intervention addresses the immediate concern facing bondholders but does not resolve the underlying dispute.
He said the parties involved are continuing discussions towards a final and mutually acceptable resolution, including arrangements for reimbursement of the funds he is advancing.
Yari added that he has remained engaged with the Board, management, financial and legal advisers and other relevant parties since the matter came to light to establish how the obligation arose and determine the appropriate resolution.
He said the company’s objective is to ensure fair treatment or reimbursement of the funds being advanced while establishing dependable arrangements for future obligations to bondholders.
Backstory
Geregu Power’s bond controversy concerns its N40.09 billion Series 1 Senior Unsecured Bond, issued under the company’s N100 billion multi-instrument issuance programme in 2022.
Nairametrics earlier reported that Geregu Power had paid N6.03 billion owed to investors on the bond, ending weeks of uncertainty over the payment.
The default was first reported by Nairametrics on August 9 and subsequently drew attention across the capital market over its potential implications for investor confidence in Nigeria’s corporate bond market.
According to FMDQ Securities Exchange, the bond was issued on July 28, 2022, carries a 14.5% coupon and is scheduled to mature on July 28, 2029.
What you should know
The bond payment comes amid heightened scrutiny of Geregu Power’s financial position following a deterioration in earnings and operational cash flows.
As a consequence of the default event, rating agency Agusto & Co withdrew the “A-” credit rating previously assigned to Geregu Power Plc and its N40.09 billion Series 1 Senior Unsecured Bond.
The agency said the decision reflected both the default and its inability to obtain sufficient reliable information to continue maintaining a rating opinion on the company.
