Oando Plc is planning to seek shareholders’ approval to raise up to N250 billion ($1.5 bn) via debt or equity.
The company plans to hold the shareholders’ meeting on February 18, it said in a statement, adding that N50 billion of the amount will be offered to existing shareholders through a rights issue, Reuters reported.
Last month the company, which is also listed on both Nigerian and Johannesburg Stock Exchanges, raised N30.7 billion in capital through a special placement exercise.
According to the company, N19.3 billion of the funds raised will be allocated to reducing the outstanding balance of Oando’s ongoing $1.6 billion acquisition of ConocoPhillips’ Nigerian assets.
Following the company’s completion Board Meeting held on December 16, 2014, the company received approval from the Securities Exchange Commission to raise the full amount through the issuance of 2.5 billion ordinary shares of 50 Kobo each at N15.00 per share. The shares were fully subscribed to, and bring Oando one step closer to completing the acquisition.
The company, which is said to have secured all financing for the outstanding payment for the ConocoPhillips’ Nigerian assets, is expected to conclude the transaction this Friday.
Oando had paid an initial deposit of $450 million, and has received additional funds through debt commitment letters received from financial institutions ($815 million), private placement of shares ($200 million), and the recent sale of its EHGC asset to Seven Energy for $250 million.
Once concluded, the ConocoPhillips transaction will substantially boost the operations of Oando Energy Resources’ (OER), the upstream business of Oando Plc, with about production of 50,000boepd post acquisition, generating extensive growth in revenue and profitability.
Additionally, the acquisition will immediately position OER as the largest indigenous oil producer in Nigeria, as the company will also grow its 2P reserves and 2C resources by 221MMboe and 492MMboe respectively.
Oando had revenues of N386.25 billion in the nine month period to September 2013 and a market capitalization of $1.04 billion as at January 28.
The company had a debt-equity ratio of 162 percent as at the third quarter of 2013.The liquidity ratio stood at 0.58 as at Q3 2013 which is lower than the 2.1 industry average.
It would be recalled that in December 2012, US-based group ConocoPhillips sold its onshore assets after 46 years of operation in Nigeria to Oando Plc for $1.79.
The acquisition comprises the indirect acquisition of all of the shares of Phillips Oil Company Nigeria Limited, Phillips Deepwater Exploration Nigeria Limited and Conoco Exploration and Production Nigeria Limited.