By Hector Igbikiowubo
SHAREHOLDERS of Oando Plc have unanimously endorsed the managementâ€™s proposed plans to raise N200 billion (approximately $1.34 billion) additional capital to strengthen the companyâ€™s capital base and support continued business growth.
The resolution was reached recently at the companyâ€™s annual general meeting (AGM), where shareholders also discussed other prospects and challenges.
A statement from management explained that the additional funding will be utilised to support the companyâ€™s expansion plans, especially in the mid and upstream oil and gas sector, including including oil explorations, the expansion of the rig fleet and extensions to the gas pipeline network, thereby consolidating its leadership position as sub_Saharan Africaâ€™s foremost integrated energy solutions provider.
Further details of the capital raising will be made available to shareholders and the broader market as they become available.
â€œWe expect a positive investor response from local and international stock markets to any capital raising option we choose to adopt, as investors are well aware of Oandoâ€™s strong fundamentals. We are encouraged by the feedback from our recent local and international roadshows to institutional investors,â€ Femi Adeyemo, Executive Director/Chief Financial Officer Oando PLC said.
Also speaking, Wale Tinubu, Chief Executive Officer of the Oando Group thanked shareholders for demonstrating overwhelming support and confidence with the endorsement.
â€œWe will now proceed to get necessary approvals from relevant regulatory authorities in Nigeria and South Africa with a view to commencing the fund_raising this quarter. In due course we will announce the structure and methodology; but it will include various financing options across multiple markets,â€ he said
â€œThe strength of our diversified business model, with diverse income streams across the entire energy value chain, will enable us to maintain steady profitability and support healthy returns in the short, medium and long term,â€ Tinubu added.
Diversification into natural gas distribution for local industries, the acquisition of five oil rigs for drilling in the Niger Delta, and the emergence of the company as Nigeriaâ€™s first indigenous producer with deepwater assets, have positioned Oando for continued growth.
Oando has consistently delivered a 58 per cent year_on_year increase in profitability over the last five years. The additional funds to be raised will reinforce its financial structure, bolstering its sector leadership and strengthen subsidiariesâ€™ capital base to take advantage of growth opportunities.
The company recently announced robust 2008 year end results. The group reported a profit after tax in the full year ending December 31, 2008 of $74.58 million. Overall, consolidated turnover increased by 79% from $1.5 billion in December 2007 to $2.7 billion in 2008. The positive growth in turnover coupled with marked improvements in margin efficiency led to an 88% increase in the groupâ€™s gross profit from $173.28 million recorded in 2007 to $326.11 million in 2008.