‘Presco’- a Nigerian Edible Oil Processor Receives Overwhelming Support for Its First US$82.8 mn Bond

Presco Plc, a fully integrated oil palm processing firm, issued N34.5 billion (US$82.8 million) in seven-year Fixed Rate Bonds under its N50 billion (US$120 million) Bond Issuance Programme. The series 1 Bond Issue, according to the company, was 247 percent subscribed and priced at a coupon rate of 12.85 percent.

It drew a diverse group of investors, including pension funds, asset managers, insurance companies, banks, and high-net-worth individuals. The specialty fat and oil supplier sought to raise N30 billion, but the order book closed at N74 billion, so the company elected to issue an additional 15% to investors, raising a total of N34.5 billion.

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

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

"We also thank Presco's Board of Directors and management for allowing the Issuing Houses to operate freely." The Bonds, according to This Day, will be listed on the Nigerian Exchange Limited and the FMDQ Securities Exchange.

This follows the company's recent agreement to seek full ownership of its competitor Siat Nigeria Limited (SNL), a subsidiary of Belgian group Siat SA. The transaction will involve all of Siat SA's SNL shares, totaling 7,330,965,143, for a unit price of N2.86 and a total cash consideration of N21 billion (US$50 million).

SNL was founded on December 11, 1991, as a wholly-owned subsidiary of Siat SA. The Rivers State Government sold the company's assets, which included 16,000 hectares of old palm plantations as well as the entire social and industrial infrastructure of the industrial oil palm complex, to Risonpalm in 2011.

SNL currently operates from two estates in Rivers State, the Ubima Estate and the Elele Estate, and has invested N6 billion in expanding its operational capacity over the last five years.

Following the acquisition, Presco intends to broaden its scope both upstream and downstream of the palm oil production chain in order to strengthen its presence in Nigeria, the African continent's largest market.

Presco currently has a mill capacity of 90 tonnes per hour and a 500 tonne per day vegetable oil refinery, while SNL has a 60 tonnes mill, which when combined will increase the value-added benefit. Presco's strategic move is intended to drive the company's long-term growth and profitability.