Dangote Cement raises N50b new short-term capital
Dangote Cement Plc yesterday closed application for a commercial paper (CP) offer aimed at raising N50 billion in additional short-term debt capital as the Sub-Saharan Africa’s largest cement group is leveraging top-notch rating to deepen balance sheet and drive overall growth.
Dangote Cement, Nigeria’s most capitalised quoted company offered Series 17 and 18 under its N150 billion commercial paper (CP) issuance programme. Application lists for the two offers opened on Monday August 31, 2020 and closed on Thursday, September 03, 2020. Dangote Cement plans to raise N50 billion across the two series.
Dangote Cement offered 177-day CP with effective yield of 4.0000 per cent and a discount rate of 3.9240 per cent under its 17th series. The 18th series CP was a 268-day instrument with effective and discount yield of 5.0000 per cent and 4.8231per cent respectively.
Minimum subscription for the two offers was N5 million and thereafter in multiples of N1,000. The CPs, are not subjected to withholding taxes. While the allotment results were being collated as at press time, market pundits believed the offers were fully subscribed.
According to the company, the net proceeds of the new capital raising would be used to fund short-term working capital requirements and for general corporate purposes.
The new offers reflected the declining yields in the fixed income market, an attraction for companies seeking to rebalance their balance sheets. Dangote Cement had offered it 15th series, a 175-day CP, with effective yield of 5.0000 per cent and a discount rate of 4.8833 per cent. The 16th series, a 266-day CP, was also offered at effective and discount yield of 6.0000 per cent and 5.7492 per cent respectively.
With an installed capacity of 45.6 metric tonnes across its operations in 10 African countries, Dangote Cement is the largest cement company in Sub Saharan Africa (SSA). It is rated AA+ long-term rating by GCR and Aa2.ng long-term rating by Moody’s. It is one of the few companies in Nigeria with a rating of AA+.
Dangote Cement had in May 2020 raised N50 billion under series 15 and 16 of the N150 billion CP issuance programme. It had in April 2020successfully launched its debut bond issuance, a N100 billion bond. The debut bond was the first series under the company’s N300 billion shelf bond issuance programme.
Dangote Cement distributed N272.6 billion to shareholders as cash dividend for the 2019 business year.
Key extracts of the audited report and accounts for the year ended December 31, 2019 showed that turnover dropped from N901.21 billion in 2018 to N891.67 billion in 2019. Gross profit also declined marginally from N517.90 billion to N511.68 billion. Profit before tax stood at N250.48 billion in 2019 as against N300.81 billion in 2018 while profit after tax dropped from N390.33 billion to N200.52 billion.
The report meanwhile indicated that the group’s investments across Africa have started yielding desired results as Pan-African sales volume grew in the year 2019, hitting 9.6 Mt from 9.4 Mt. Dangote Cement Plant, Mtwara, Tanzania, recorded an increase of 94 percent increase in volume within the review period. Dangote Cement Plant, Pout, Senegal put up a remarkable performance with sales up more than 100 percent of rated capacity.
Dangote Cement is Africa’s leading cement producer with nearly 46Mta capacity across Africa. it is a fully integrated quarry-to-customer producer, with a production capacity of 29.25Mta in its home market, Nigeria. Obajana plant in Kogi state, Nigeria, is the largest in Africa with 13.25Mta of capacity across four lines; Ibese plant in Ogun State has four cement lines with a combined installed capacity of 12Mta and Gboko plant in Benue state has 4Mta.
In addition, Dangote Cement has operations in Cameroon (1.5Mta clinker grinding), Congo (1.5Mta), Ghana (1.5Mta import), Ethiopia (2.5Mta), Senegal (1.5Mta), Sierra Leone (0.5Mta import), South Africa (2.8Mta), Tanzania (3.0Mta), Zambia (1.5Mta).