Abraaj in­vests $10m in C&I Leas­ing af­ter debt for eq­uity swap

Business Day (Nigeria) - - COMPANIES & MARKETS - FIKAYO OWOEYE

In what could be termed as a boost for the Nige­rian in­vest­ment space, Africa fo­cused eq­uity firm, Abraaj has an­nounced the con­ver­sion of its Aureos Africa Fund of $ 10 mil­lion loan stock in C&I Leas­ing Plc to eq­uity. At C & I Leas­ing’s cur­rent mar­ket price of N1.78, $10 mil­lion (N3 bil­lion) would equate to 89 per­cent of the com­pany, val­ued at N3.35 bil­lion. It is un­der­stood that C& I will is­sue ad­di­tional shares to con­sum­mate the deal. The com­pany had in De­cem­ber an­nounced plans to re­struc­ture its is­sued and paid- up share cap­i­tal, con­sol­i­dat­ing ev­ery four (4) or­di­nary shares cur­rently held to one (1) new share in the com­pany. The pur­pose of the re­con­struc­tion was to al­low the com­pany to have enough unis­sued shares to ac­com­mo­date the con­ver­sion of the Abraaj loan stock to or­di­nary shares and to raise ad­di­tional cap­i­tal through the cap­i­tal mar­ket for busi­ness ex­pan­sion. The move is ex­pected to be di­lu­tive for ex­ist­ing share­hold­ers. C & I was un­changed at N1.78 at close of trad­ing Wednesday, ac­cord­ing to NSE data. About Abraaj’s debt con­ver­sion to eq­uity, An­drew Otike-odibi the MD/CEO of the leas­ing com­pany said the devel­op­ment was pos­i­tive. “It im­proves the cap­i­tal struc­ture of the com­pany and helps po­si­tion it favourably for ad­di­tional cap­i­tal raise from the mar­ket in Q1 2019,” Otike-odibi said. Abraaj had a rough 2018 which saw a fill­ing for liq­ui­da­tion in the Cay­man Is­lands, fol­low­ing com­plaints by four in­vestors which in­cludes the Bill & Melinda Gates Foun­da­tion and In­ter­na­tional Fi­nance Corp ( IFC), over how it used their money in a $1 bil­lion health­care fund. Abraaj’s founder, Arif Naqvi stepped down stepped down from the fund-man­age­ment unit. Naqvi and the com­pany, how­ever, de­nied wrong­do­ing and blamed un­fore­seen po­lit­i­cal and reg­u­la­tory hur­dles for a de­lay in de­ploy­ing the money. C&I Leas­ing first at­tracted Abraaj fund­ing in June 2006, af­ter se­cur­ing a $ 4 mil­lion in­vest­ment from the P.E firm and the group has con­tin­ued to main­tain a huge pres­ence in Nige­ria’s mar­ket space. The PE firm has a 20% eq­uity stake in CWG Plc, 5.92% stake in Cus­to­dian & Al­lied In­sur­ance Plc. Other in­vest­ments in­clude AOS Or­well Ltd, Mouka Foam, Eleme Fer­til­izer and Petro­chem­i­cals, Fan Milk. The Dubai-based Abraaj Group, how­ever, sold its en­tire stake in Egypt’s Oras­com Con­struc­tion in its bid to re­struc­ture fol­low­ing al­le­ga­tions of mis­used funds. For the An­drew Odibi-led board of the com­pany, it has an am­bi­tious plan to grow and make the com­pany the go-to com­pany for ma­rine IOCS in the coun­try and give in­vestors a good re­turn on their in­vest­ment. It re­cently an­nounced the ac­qui­si­tion of two brand new 2018 ‘ASD 2913 Tug­boat which will be de­ployed for a long- term con­tract with Nige­rian Liq­ue­fied Nat­u­ral Gas Com­pany (NLNG). It had ear­lier in July 2018 con­cluded the buy­out of a 27.5% mi­nor­ity stake in C&I Petrotech Ma­rine Ltd, the com­pany’s ma­rine busi­ness sub­sidiary, and in the process took over com­plete own­er­ship of s I x ves­sels which are presently de­ployed in a long-term con­tract with Shell Petroleum Devel­op­ment Com­pany of Nige­ria (SPDC) The new con­ver­sion of the loan to eq­uity could not have come at a bet­ter time when the com­pany is work­ing hard to clean up its huge debts to banks and other ‘In­sti­tu­tional Clients’. Ac­cord­ing to its Half year ended June 31st, 2018, C&I has a long list of com­pa­nies is ow­ing, from Banks, bond­hold­ers, to tax au­thor­i­ties. Al­though, the com­pany has been able to re­main rel­a­tively prof­itable over the years, with a mea­gre div­i­dend to its Share­hold­ers. Fig­ures from the com­pany’s re­sult show that its rev­enue surged from N12.2 bil­lion in 2013 to 21.3 bil­lion in 2017. Sim­i­larly, it re­mained prof­itable over the same pe­riod with PAT in­creas­ing from N161 mil­lion in 2013 to 1.1 bil­lion in 2017. C&I Leas­ing Plc was in­cor­po­rated in 1990 and it spe­cial­izes in the pro­vi­sion of ser­vices such as Fleet man­age­ment, au­to­mo­bile dis­tri­bu­tion, ma­rine ves­sel rental, equip­ment leas­ing, se­cu­rity and es­cort ser­vices.

Source: Bloomberg

Shares are down from 2018’s peak

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