Dangote Group is planning to sell 12.75% stake in the Dangote Petroleum Refinery over liquidity concerns, according Fitch, a credit rating agency.
In a statement on Monday, Fitch said Dangote Industries plans to use the proceeds from the stake sold to service a sizable syndicated loan that matures on August 31, 2024.
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Fitch said Dangote Group has senior secured debt raised at subsidiary levels amounting to US$2.7 billion at the end of 2023, representing 49 percent of total group debt.
“The debt structure also includes an on-demand shareholder loans from its ultimate parent Greenview plc, amounting to $2.3 billion representing 43 percent of total debt,” Fitch said.
“We view the shareholder loans as subordinated debt. The company has also raised senior unsecured debt amounting to N350 billion with long-dated maturities in 2029 and 2032 to finance capex requirements,” Fitch added.
In June, Aliko Dangote, the founder of Dangote Group revealed that he has paid off US$2.4bn of the US$5.5bn for his US$19bn refinery.
“We borrowed the money based on our own balance sheet. I think we borrowed just over $5.5bn. But we also paid a lot of interest as we went along, because the project was delayed because of a lack of land, also the sand-filling took a long time. Almost five years or so we didn’t do anything.
“We actually started in 2018. We borrowed that much. We have, of course, paid interest and some principal, about $2.4bn. We’ve done very well. We now have only about $2.7bn left to be paid. So we’ve done very well for a project of that magnitude,” he said.
In September 2021, NNPC acquired a 20 percent interest in Dangote refinery for $2.76 billion.
However, Aliko Dangote, Africa’s richest person, on July 14, said the national oil company now owns 7.2 percent stake in the refinery.
Since the option has not been exercised, the rating company said the Dangote Group plans to sell a 12.75 percent stake in the Dangote refinery this year.
The 650,000 barrels per day capacity refinery commenced operations in January, 2024.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur