Sub-Sahara Africa’s largest cement producer Dangote Cement has filed a shelf programme to issue up to N150 billion in commercial paper, with an initial issuance of N50 billion.
The tenor for the initial issuance is 180 to 270 days and the offer opens on the 22nd of June and closes on the 26th of June 2018.
Date of allotment for this commercial paper is 26th of June with a funding date of 27th of June. The minimum investment is N5 million and multiples of N1000 thereafter.
Commercial Papers are short-term debt financing securities (no longer than 270 days in tenor) consisting of unsecured and discounted promissory notes issued by large corporations with good credit ratings, which can be readily traded. Due to their relatively short maturity period, commercial papers are referred to as low-risk investments, offering competitive returns to investors in compensation for the issuer’s credit risk.
Dangote Cement is rated Aaa by Moody’s for local currency issuances. The company explained that the proceeds of the commercial paper would fund short term working capital requirements and for general corporate purposes after which it will be listed on the FMDQ OTC exchange.
Dangote has built a strong leadership position in Nigeria with a market share of 67 percent.
Dangote cement has 45.6Mta capacity across 10 countries and with a market capitalisation of N4.073 trillion.
Revenue of the company grew by 31 percent from N615.1 billion at the end of 2016 to N805.6 billion as at full year (FY) 2017. Net income also increased by 43 percent from N142.9 billion to N204.2 billion.
For first quarter, 2018 results, the company’s revenue was up by 16.3 percent from approximately N208.2 billion in 2017 to N242.1 billion in 2018.
Earnings before interest, tax, depreciation and amortisation (EBITDA) also increased by 22.2 percent from N103 billion to N 125.9 billion with gross margins of 52.0 percent in 2018 first quarter.
EBITDA margins grew from 41.8 percent in 2016 to 48.2 percent in 2017 despite recent macro-economic slowdown in Nigeria.
Over the past five years, Dangote cement has invested over N726billion whilst maintaining net debt to EBITDA at or below 1.05x.