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N35bn Bond: Flour Mills records over-subscription, plans listing

By Michael Eboh

Flour Mills Nigeria Plc has disclosed the successful completion of its N35 billion bond issue, as it recorded an over-subscription of 7.14 per cent.

Speaking at the completion board meeting held in Lagos weekend, Managing Director of the company, Chief Dr. Emmanuel Ukpabi said that the company intends listing the bonds on the Nigerian Stock Exchange (NSE) immediately it gets the approval of the relevant authorities.

According to him, an application has been made for the bonds to be listed on the NSE and it is expected that this would happen shortly after the Quotations Committee meeting of the Council of the NSE.

He said that the Series One, 12 per cent, Fixed Rate Senior Unsecured Bond Issue,  under a N70 billion debt issuance, was overwhelmingly subscribed to, with a total of N49.8 billion in bids being received from a number of investors.
He noted that although Flour Mills targeted an initial issue amount of N35 billion, the company accepted bids up to 12 per cent, for a total amount of N37.5 billion.
Ukpabi said: “The management of the company is extremely pleased with the outcome of this transaction and the benefits it provides to the Flour Mills Group’s expansion plans. We take this opportunity to express our appreciation also for the fantastic job done by our advisors, UBA Capital Limited, Guaranty Trust Bank Plc and Zenith Capital Limited, in putting the transaction together”.

“Flour Mills successfully raised the amount of N37.5 billion in respect of the first tranche, Series 1, at a coupon rate of 12 per cent. Tenor or final maturity for the Bonds is five years.

“The coupon is payable every 6 months, whereas the principal repayment will be amortised from beginning of year 3 until final maturity, following a grace period of 24 months.”
Speaking in the same vein, Group Treasury Director, Flour Mills, Mr. Vlassis Liakouris said, “With the advent of this bond issue and inclusion of long term debt in our capital structure, the working capital adequacy and financial flexibility of the Company is greatly improved.
“The benefits of our expansion will, no doubt, also significantly enhance our already strong and robust cash flow generating capacity. We have also successfully diversified our funding base to include non_bank institutional investors, which is a laudable feat.”

Speaking on behalf of the lead issuing house and the joint issuing houses of the transaction Mr. Amadou Hott, Managing Director/Chief Executive Officer, UBA Capital said “This transaction is arguably the largest ever local currency corporate bond issue to date in West Africa, and a significant milestone for the Nigerian capital markets.

“The tight pricing level of 12 per cent achieved also demonstrates the confidence investors place in the credibility of the Issuer. Overall, we are also pleased to observe the positive impact of the recent tax incentives introduced by the Federal Government in respect of Corporate Bonds.”


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