Flour Mills of Nigeria plans share sale to reduce debt

Flour Mills of Nigeria said it plans to sell shares via a rights issue to cut debt and is registering a 70 billion naira bond programme to refinance short-term loans, the conglomerate said on Wednesday.
Several Nigerian companies have tapped capital markets this year to shore up their balance sheets after a currency crisis in 2015 dragged the country’s economy into recession and stoked inflation, frustrating businesses and consumers.
Nigeria’s economy has since recovered, but growth is fragile and although Flour Mills expects consumer activity to pick up, it said confidence was only slowly improving, with personal incomes under pressure and not keeping pace with inflation.
The conglomerate, which has interests in food manufacturing, agro-business, packaging and logistics, said it was in the process of concluding the timing and size of the share sale.
Flour Mills registered plans with regulators to raise up to 40 billion naira in equity over a three year period and obtained approval from shareholders last year to sell shares, but weak capital markets delayed its launch.
Last year, it said it had $20 million in foreign currency loans and was exploring alternative financing sources to mitigate higher costs from a weak naira.
The company posted a 53.1 percent rise in six month pretax profit to 13.48 billion naira, but said finance costs rose 48.9 percent to 16.27 billion naira.
It said food manufacturing was the main driver of growth and accounted for 78 percent of its revenues.
Shares in the company, which has gained 70.4 percent so far this year, rose 1.94 percent on Wednesday to 33.08 naira.