Flour Mills of Nigeria Seeks $306 Million to Cut Funding Costs

LAGOS (Capital Markets in Africa) – Flour Mills of Nigeria Plc, the country’s biggest miller by market value, plans to raise 110 billion naira ($306 million) in equity and debt as it seeks to reduce costs and boost operations in the West African nation.

The company plans to raise as much as 40 billion naira by rights issue and 70 billion naira through “medium-term notes,’’ according to a statement Monday on the website of the Nigerian Stock Exchange. It’s making plans to start the first tranche of the rights issue, which was registered with the Securities and Exchange Commission in 2016, the company said in the statement.

Nigerian firms are struggling with high borrowing cost as monetary tightening policy introduced by the central bank has resulted in high interest rates on bank loans and corporate bonds. The benchmark interest rate was left unchanged at a record 14 percent on Sept. 26.

Interest on bank loans rose to 22 percent to 25 percent per annum this year, compared with 17 to 21 percent in 2016, which forces companies to seek cheaper funding sources including equity, Flour Mills Managing Director Paul Gbededo said in August.

The company has started talks with financial and legal advisers to determine the “right time and cost” for the debt program, according to the statement.

Source: Bloomberg Business News