NIGERIA – Ellah Lakes Plc, diversified Nigerian agribusiness company has inked a produce off-take agreement with Pure Flour Mills Limited (PFM), a subsidiary DeUnited Foods Industries Limited, for the supply of a minimum of approximately 5000 metric tonnes of cassava to its processing facility in Edo State.
According to reports by This Day, the company will commence delivery of the initial tonnage from the yields of the 2020/ 21 harvesting season.
Majorly focusing on oil palm processing in Nigeria, Ellah Lakes is seeking to raise US$40 million from a combination of debt and equity capital.
The fundraising is aimed to enable the company expand its oil palm production and meet increasing demand of the commodity propelled by government restrictions on imports which has widened the existing supply gap.
The capital raising by Ellah started earlier this year through a private placement but was halted due to the coronavirus pandemic, revealed the company’s Chief Executive Officer, Chuka Mordi in an interview with Bloomberg. But the negotiations will resume once the restrictions ease.
From the US$40 million targeted, the company, based in Edo State is raising US$35 million by offering shares and debt as well as another US$5.4 million in equity.
The funds will mostly be utilized to finance oil palm plantations, seedlings and fertilizer as the company is looking to cultivate 4,000 hectares of oil palm plantation by year-end from the current 2,300 hectares.
To further its investment in the oil palm sector, the company recently revealed that it is seeking to acquire an oil palm processing company with substantial assets in Delta State.
Ellah Lakes began its journey in 1980 and built one of the largest fish farms in Nigeria. Through the acquisition of Telluria Farms in May 2019, the company transformed into a vertically integrated oil palm company.
Ellah Lakes is increasing oil palm production amid intensified efforts by President Muhammadu Buhari’s government to encourage investment in agriculture and industries to help diversify the economy away from crude oil, which accounts for 90 per cent of export earnings.
The company will export some output to earn foreign exchange even though local demand is strong.
Nigeria accounts for about one per cent of global output of the commodity, producing one million tons annually and consuming about at 1.4 million tons, according to the United States Department of Agriculture.
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