Flour Mills of Nigeria eyes bond sale within two months

Flour and pasta maker Flour Mills of Nigeria plans to issue a bond within the next two months as part of a N70 billion programme to refinance existing debt, a group executive said. Anders Kristiansson, group chief finance officer, said the move was aimed at taking advantage of low money market rates, adding that Flour Mills had taken proactive measures to conserve cash in response to the coronavirus pandemic. The company sold 30 billion Naira in commercial paper in April, it said, part of measures to cushion the possible impact of the coronavirus on its business.

“We have a 70 billion bond programme. We are looking to tap into the market again given the low interest rate environment,” Kristiansson told an analyst call. “We anticipate coming to the market to refinance some of our existing debt by bring a bond to the market. We anticipate doing that in the next two months.” Flour Mills said it has seen steady growth in its food business and agro-business and that first-quarter revenue grew 15% to 154.6 billion Naira. The company has around 75.8 billion Naira in net debt as at the first quarter. Yields on short-term bills and bonds have fallen under 6% from double digits due to excess liquidity on money markets as foreign investors dump assets to repatriate funds.

The government is also providing stimulus to help businesses cushion the impact of the pandemic.

The company said it was pursuing an organic growth strategy and planned to expand its edible oil refinery and grow the reach of its animal feed products. Flour Mills shares, which are down 24 percent so far from their January peak, traded flat on Monday at 18.20 Naira each, valuing the company at 47.76 billion Naira.