Nigerian edible oil processor Presco gains overwhelming support for its maiden US$82.8m bond

NIGERIA – Presco Plc, a fully integrated oil palm processing firm, issued its first bond issuance in the Nigerian debt capital markets totalling N34.5billion (US$82.8m), seven-year Fixed Rate Bonds under its N50 billion (US$120m) Bond Issuance Programme.

According to the company, the series 1 Bond Issue was 247% subscribed and priced at a coupon rate of 12.85%. 

It attracted participation from a wide range of investors including pension funds, asset managers, insurance companies, banks and high net worth individuals. 

The supplier of specialty fat and oils sought out to raise N30billion but the order book closed at N74billion, so the company elected to issue an additional 15% to investors thus raising a total of N34.5 billion.

Stanbic IBTC Capital Limited acted as Lead Issuing House to the Bond Issue, while CardinalStone Partners Limited and Quantum Zenith Capital and Investments Limited acted as Joint Issuing Houses to the Bond Issue.

Chief Executive of Stanbic IBTC Capital, said, “We thank the institutional investor community for supporting the Issue, as its success should encourage other similar companies to access the domestic debt capital markets for their strategic funding needs. 

 “We also thank the Board and management of Presco for giving the Issuing Houses a free hand to guide the process.”

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According to reports by This Day, the Bonds will be listed on Nigerian Exchange Limited and FMDQ Securities Exchange.

This is coming on the heels of the company’s recent deal of seeking to take full ownership of its competitor Siat Nigeria Limited (SNL), a subsidiary of Belgian group Siat SA.

The transaction will concern all the shares of SNL held by Siat SA amounting to 7,330,965,143 for a unit price of N2.86 for a total cash consideration of N21 billion (US$50m).

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SNL was incorporated on 11 December 1991 as a wholly owned subsidiary of Siat SA.

In 2011, the company acquired the assets of Risonpalm, which comprised 16,000 hectares of old palm plantations, as well as the entire social and industrial infrastructure of the industrial oil palm complex from the Rivers State Government.

Currently, SNL operates from two estates in Rivers State, the Ubima Estate and the Elele Estate and over the last five years, has invested N6billion in developing its operational capacity.

Following the acquisition, Presco intends to gain in scope both upstream and downstream of the palm oil production chain to strengthen its presence on the Nigerian market, which is the largest on the African continent.

At the moment Presco has a mill capacity of 90 tons per hour and a 500 ton per day vegetable oil refinery, while SNL has a 60 ton mill which combined will increase the benefit of value added.

The strategic move by Presco is aimed to drive sustained long-term growth and profitability of the company.

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