Abraaj invests $10m in C&I Leasing after debt for equity swap
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.
Shares are down from 2018’s peak