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Dangote Sugar Refinery Raises $28.8 Million Via Commercial Paper

Dangote Sugar Refinery, owned by Aliko Dangote, has successfully raised N42.79 billion ($28.8 million) through series 4 and 5 Commercial Paper (CP) issuance. This strategic move comes as the corporation faces a tough borrowing environment in Nigeria.

The issuance, part of Dangote Sugar’s N150 billion ($101.07 million) CP program, is divided into two tranches with the goal of improving financial flexibility. Series 4, at N12.93 billion ($8.72 million), offers a 181-day term at a 23% discount. Series 5 is N29.86 billion ($20.13 million) with a 265-day term at 25%. The offering attracted a wide range of investors, including pension and non-pension asset managers, institutional investors, and private people.

Dangote Sugar Refinery noted in a news release that the successful issuing of Notes reflects investor confidence in their operations and financial plan, contributing to the company’s financial objectives. “We are committed to utilizing these funds efficiently to support our working capital and drive growth.”

The proceeds from the CP issuance will help Dangote Sugar fulfill its short-term working capital and liquidity requirements, enhancing its flexibility to meet operational demands and execute strategic initiatives. The action demonstrates the company’s proactive effort to utilize the fixed-income market to acquire more cost-effective funding despite Nigeria’s high borrowing costs, which sometimes surpass 40%.

Despite issues such as currency volatility and inflation affecting Nigerian manufacturers, Dangote Sugar’s CP offerings are a viable option to regular bank loans, with rates much lower than market averages.

Since its admittance to the FMDQ on February 9, 2024, Dangote Sugar has raised N99.01 billion ($68.87 million) through series 1, 2, and 3 CP issuances. This includes N39.39 billion ($26.56 million) in Series 1, N6.15 billion ($4.15 million) in Series 2, and N53.47 billion ($36.05 million) in Series 3, indicating high investor interest in the company’s financial instruments.

Dangote Sugar Refinery increased revenue to $88.17 million in Q1 2024, but experienced a loss of $49.6 million due to naira devaluation. Looking ahead, the business intends to use the proceeds from the Notes to maintain operational excellence and pursue more expansion in the competitive Nigerian market.

Aliko Dangote, worth $15 billion on the Bloomberg Billionaire Index, owns a 72.7 percent share in Dangote Sugar, demonstrating his dedication to the company’s strategic expansion and sustainability.

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