Dangote Cement reaffirms commitment to shareholders’ value
AFRICA’s largest cement producer, Dangote Cement Plc , has restated its commitment to maximizing shareholders’ value as it continues to maintain financial discipline and liquidity.
Reacting to the award of AA+(NG) and A1+(NG) ratings from Global Credit Ratings(GCR), Dangote Cement stated that the rating was a confirmation of the strength of the company.
In its report, GCR affirmed the long-term and short-term national scale issuer ratings of AA+ (NG) and A1+(NG) respectively, assigned to Dangote Cement, as well as with the outlook accorded as Stable. In addition, the cement firm’s N100 billion Series 1 Fixed Rate Bond has been assigned AA+.
Chief Executive Officer, Dangote Cement Plc, Michel Puchercos said the rating signified that Dangote Cement’s credit profile and liquidity is very strong, with low risk of default.
According to him, the rating accorded to Dangote Cement is an investment grade rating, signifying that it is an attractive investment vehicle.
“Dangote Cement has shown great resilience in 2020 despite the COVID-19 pandemic and a challenging environment. The Group continues to report strong cash generation while maintaining strong financial discipline. As Africa’s leading cement producer, we are committed to maximising shareholder value creation,” Puchercos said.
Book building with respect to the issuance commenced on 3 April 2020 following approval from the Securities and Exchange Commission and closed on 15 April 2020 at a coupon rate of 12.50 percent.
Despite market headwinds due to the COVID-19 pandemic, the transaction was extremely well received and attracted significant demand from a wide range of high-quality investors including domestic pension funds, asset managers, insurance companies, banks and international fund managers. The total order book amounted to 155 billion.
The transaction represented the largest corporate bond issuance in Nigeria’s debt capital markets as at time of issue, reflecting Dangote Cement’s strong credit quality as well as the resilience of the Nigerian debt capital market despite current global challenges.
The transaction enabled the company to lower its average cost of debt and extend the average maturity of its debt. Dangote Cement intends to use the net proceeds of the offering to refinance existing short-term debt previously applied towards cement expansion projects, working capital and general corporate purposes.
Dangote Cement is Africa’s leading cement producer with nearly 48.6Mta capacity across Africa. A fully integrated quarry-to-customer producer, it has a production capacity of 32.25Mta in its home market, Nigeria. Its Obajana plant in Kogi state, Nigeria, is the largest in Africa with 16.25Mta of capacity across five 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 and Zambia, with 1.5Mta