Oando plans N500 billion share sale, other moves to address capital shortfall

Oando Plc will head to the market any moment soon to raise half a trillion naira in fresh equity capital as part of a broader effort to reinvigorate operations after liabilities jumped to N7.1 trillion at the end of June, turning shareholder fund to negative.

The oil driller got shareholders’ consent “to raise additional capital of up to N500,000,000,000.00 (five hundred billion naira only) or its foreign currency equivalent in the Nigerian and/or international capital markets through the issuance of up to 10,000,000,000 (ten billion) ordinary shares of 50 kobo each,” a regulatory filing stated on Tuesday.

That puts the price of the potential equity issue at N50 per share, a 3.8 per cent discount to its price at market close on the Nigerian Exchange. Oando is listed in Lagos as well as on the bourse in Johannesburg.

The capital raise could take the shape of “a standalone issue or by the establishment of capital raising programmes, whether by way of public offerings, private placements, debt to equity conversions, rights issues and/or other transaction modes,” the company stated further.

A steady rise in liabilities has kept equity perennially in the red since December 2020, causing net assets to surge by roughly 352 per cent to -N305.9 billion between then and this June, its earnings reports showed.

Total liabilities hit N7.1 trillion in the first half of the year from N6.8 trillion a year earlier, driven by increased borrowings from banks and other lenders.

On top of the obligations it needs to settle with creditors within the next year are trade & other payables of N2.6 trillion and bank borrowings totalling N1.1 trillion.

On Monday, the company held an emergency general meeting to consider “the measures for addressing the diminution in capital for the year ended 31st December 2024,” the corporation said in a separate statement on Tuesday.

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Shareholders have given the board the go-ahead to hold capital restructuring talks with major stakeholders and convert, at most, $300 million of its reserve-based lending (rbl) facility debt into equity, it said.

In June, Oando had increased its rbl with Afreximbank, which stood at $100 million at the end of last year, to $375 million to help boost daily output to 100,000 barrels by 2029.

It has also been authorised by shareholders to launch a multi-instrument issuance programme of no more than $1.5 billion in the capital raise quest.

After-tax profit for the year to June climbed 1.1 per cent to N63.3 billion, driven by a leap in income tax credit.