Top food producer, Flour Mills of Nigeria Plc, on Thursday opened the bid for investors to buy into its Commercial Paper debt instrument through which it hopes to raise N48 billion.
Cordros Capital Limited, the deal arranger, said the offer opens on April 4 and will close on April 9, 2024. April 10 is both the settlement and issue date.
The series 7 and 8 commercial paper sales to the investing public have 180-day and 254 tenors at the rate of 23.5 percent and 25.5 percent with October 7 and December 20 being maturity dates.
To boost its working capital requirement, the company’s series 7 and 8 commercial paper sales are part of the company’s N200 billion commercial paper issuance programme. The company has good ratings, though exposure to FX liabilities damaged its earnings consistently.
In a rating note, Agusto & Co. said it affirmed the ‘A-‘ rating assigned to Flour Mills of Nigeria, reflecting the relative stability in the company’s earnings despite industry-wide challenges of higher foreign exchange losses and rising interest costs during the year.
The rating also takes into consideration FMN’s leading position in the domestic flour milling market and the potential revenue and cost synergies to be derived from the proposed business integration with Honeywell Flour Mill PLC.
In the first half of 2024 result, the food producer’s performance was quite underwhelming, as profitability was significantly impeded by higher operating expenses and net exchange losses, according to Cordros Capital Limited.
According to a recent financial statement posted on the Nigerian Exchange, FMN Plc grew top line substantially, up by about 34 percent year on year and analysts revealed expectation that Flour Mills’ revenue would sustain its stellar momentum.
In an update, Cordros Capital Limited analysts said they believe the company’s performance will be inhibited by a higher costs outlook in the second half of the financial year 2024 and the sustained impact of higher FX losses on its net operating income.
