By Yakubu LAAH InvestAdvocate
Lagos (INVESTADVOCATE)- The largest integrated energy solutions group in Sub-Saharan Africa, Oando Plc said on Tuesday it has reached agreement to sell an equity stake in its downstream business for $276 million to HV Investments, a joint venture consisting of Helios Investment Partners and Vitol Group.
Oando says the deal is conditional upon the receipt of regulatory approvals and subject to customary purchase price adjustments, including working capital.
According to the Nigerian integrated oil and Gas Company, the transaction will see HV Investments acquiring its 51 percent of voting rights and 60 percent of the economic rights in Oando’s downstream businesses.
“This transaction is an exciting development in downstream West Africa. By working with Vitol, a global energy and Commodities Company and the largest independent trader of energy products, and Helios, a premier Africa-focused private investment firm, Oando Plc has repositioned Oando downstream for a new era of investment growth and profitability. Importantly, the divestment enables Oando Plc to focus on its upstream and midstream businesses. Even as proceeds of the sale will be applied almost entirely to reducing Oando’s leverage, we underscore the portfolio rationalisation achieved alongside the balance sheet optimization,” a statement from Oando quoted Wale Tinubu, group chief executive (GCE) of Oando as saying.
According to the primary and secondary listed company on the Nigerian Stock Exchange (NSE) and the Johannesburg Stock Exchange (JSE) respectively, its downstream businesses primarily consist of Oando Marketing Plc (“OMP”), a petroleum product retailing and distribution company with over 400 retail outlets and strategically located terminals in Nigeria, Ghana and Togo. “OMP distributes premium motor spirit, automotive gas oil, dual-purpose kerosene, aviation turbine kerosene, low pour fuel oil, lubricating oils, greases, bitumen and liquefied petroleum gas. Key OMP subsidiaries that are part of the Acquisition include, Oando Ghana Limited, Oando Togo SA, and Clean Cooking Fuel Investments Ltd,” the company affirmed.
Another downstream business of the company is Oando Supply & Trading Limited (“OS&T”), a leading indigenous physical trader of petroleum products in the sub-Saharan region, supplying and trading crude oil and refined petroleum products. OS&T trades large volume cargoes to major oil marketers and independent marketers in Nigeria.
While another is Oando Trading Limited (Bermuda) (“OTB”), an entity involved in the trading of crude oil and refined petroleum products in international markets.
The other is the Apapa SPM Limited, the marina jetty and subsea pipeline system capable of berthing large vessels that will increase the delivery capacity and offloading efficiency of petroleum products into major petroleum marketers’ storage
Oando says pursuant to the acquisition, a special purpose vehicle will hold 100 percent of the economic interests and 49 percent of the voting rights of its Downstream.
“The total consideration of $461.3 million will be funded by a $276.8 million cash contribution from HVI and $184.5 million in preference shares issued to Oando Plc, subject to customary purchase price adjustments, including working capital and long-term debt. At closing, HVI will own 60 percent of the special purpose vehicle, while Oando Plc will hold a 40 percent stake,” the oil marketer added.
Share price of oando on Tuesday dipped 1.26 percent to N15.70 from N15.90 traded on Monday’s session at the Nigerian bourse; losing 0.20 kobo per share.
