Economy

Forte Oil Liquidity Position Relatively Weak—GCR

Published

6 years ago

06/08/2019

By Dipo Olowookere

A local credit rating agency, Global Credit Ratings (GCR), has described the liquidity position of an indigenous energy firm, Forte Oil Plc, as “relatively weak.”

In a statement issued by the rating company, the short term rating of Forte Oil was downgraded to A2(NG), with the outlook accorded as stable.

GCR explained that the weak liquidity as well as the company’s low debt service coverage and significant budget underperformance contributed to the one-notch downgrade of the short-term rating.

However, a long term national scale ratings were assigned to Forte Oil at A-(NG), with its issue rating of A-(NG) concurrently affirmed and the outlook accorded as stable.

It was explained that the ratings factor Forte Oil’s strong market presence in the Nigerian downstream oil industry as the firm owns significant assets across the value chain with an extensive distribution and retail network, supported by long-term relationships with suppliers, and an experienced management team.

In the first half of 2019, Forte Oil successfully divested from its power business and other subsidiaries and given the persistent cash flow challenges, the subsidiaries were a substantial drain on the core business and were partly responsible for the elevated gearing.

GCR said excluding the power business, gross debt from continuing operations fell to N18.7 billion in FY18 (FY17: N34.8 billion). This translated into a much lower net debt to EBITDA of 423 percent at FY18, but still well above forecasts.

The metrics deteriorated further to 662 percent in 5M FY19. Without the power business working capital pressure is also expected to ease, which will contribute to lower gearing.

In addition, Forte Oil plans to utilise proceeds from the sale to reduce debt. GCR said the assigned ratings are thus premised on a sustained reduction in earnings based gearing to below 70 percent over the medium term and reach a net ungeared position by FY21.

GCR stated in the released that the high short-term maturities (70 percent of total debt), are reflective of the short-term nature of fuel inventories, but cash holdings are very low, offering no buffer against debt maturities.

“Some comfort is taken from Forte Oil’s strong banking relationships, and the N13 billion unutilised credit facilities.

“The imminent maturity of the federal government’s irrevocable unconditional promissory note should also somewhat bolster liquidity,” the rating agency said.

It noted that excluding the power business (28 percent of revenue in FY17), Forte Oil still demonstrates strong revenue generating capacity, underpinned by the ongoing retail expansion and aggressive marketing initiatives.

However, the remaining business reports an inherently lower profit margin, due to the high cost environment, amid tight regulation of premium motor spirit (PMS) (70 percent of total revenue).

“This, coupled with high finance costs, saw net interest coverage narrow to a low 1.6x in FY18 (FY17: 3.1x), which shrank further to 0.5x in 5M FY19,” the statement obtained by Business Post said.

In the medium to long term, Forte Oil plans to strengthen its margins through increased fuel volumes and a focus on higher margin lubes and greases.

GCR stressed that a rating uplift is dependent on demonstrated reduction in debt and a significant ramping up of volumes and margins (in line with targets).

“Conversely, persistently high gearing metrics post the sale, as well as poor interest coverage, could negatively impact the rating,” it noted.

Economy

Xenergi in Talks to Acquire 51% Stake in Premier Paints

Published

54 minutes ago

17/12/2025

Aduragbemi Omiyale

By Aduragbemi Omiyale

One of the paint makers in Nigeria, Premier Paints Plc, is currently in talks with a new investor, Xenergi Limited, for the purchase of 51 per cent stake in the company.

Xenergi Limited intends to acquire shares of Clover Global Resources Limited and TGHL Capital Limited in the organisation.

Business Post gathered that the new investor will buy 39.02 per cent from Clover Global Resources Limited and 15.20 per cent from TGHL Capital Limited.

The deal, according to a regulatory notice issued on Tuesday on the Nigerian Exchange (NGX) Limited, will involve about 63 million shares of Premier Paints.

At the current share price of the paint producer, this should be about N630 million as it closed at N10.00 per unit on NGX on December 16, 2025.

“Subject to obtaining required regulatory approvals, the transaction is expected to close before January 31, 2026.

“The company will continue to inform the public of the progress of the transaction,” the disclosure signed by the company secretary, Alozie Nwokoro, said.

Economy

Naira Trades Flat Across FX Market Windows as CBN Moves to Ease Pressure

Published

3 hours ago

17/12/2025

Adedapo Adesanya

By Adedapo Adesanya

The Naira was flat against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Tuesday, December 16, retaining the previous closing value of N1,451.82/$1.

In the same vein, the local currency saw no movement against the Pound Sterling and the Euro in the spot market during the session at N1,943.98/£1 and N1,705.74/€1, respectively.

Also, the Nigerian Naira remained unchanged in the black market yesterday at N1,475/$1 and was N1,460/$1 at the GTBank forex counter.

The Central Bank of Nigeria (CBN) has strengthened US Dollar supply with $250 million to authorised dealer banks at the official window cumulatively as foreign portfolio investors, exporters and non-bank corporate supply dripped.

The spread between official and other non-regulated markets decreased to N30.59$/1 from N44.57/$1, from the previous week, research subsidiary of Coronation Merchant Bank Limited said in a report.

FX analysts said foreign exchange inflows through the Nigerian Foreign Exchange Market decreased to $716.3 million from $844.70 million in the previous week , a 15 per cent drop in a week.

Foreign portfolio investors accounted for the highest share of inflows at 32.98 per cent, followed by exporters at 30.84 per cent, the CBN (17.36 per cent), Non-bank Corporates (16.94 per cent), others (0.72 per cent) and Individuals (0.63 per cent).

On Monday, Nigeria’s headline inflation rate eased to 14.45 per cent in November 2025, down from 16.05 per cent recorded in October, according to the latest Consumer Price Index (CPI) report released by the National Bureau of Statistics (NBS), representing a decrease of 1.6 percentage points month-on-month and marks a significant moderation compared to the same period last year.

As for the cryptocurrency market, there was some recoveries after overall capitalization falling below $3 trillion for the third time in a month. Large-cap assets, particularly those with Exchange Traded Fund (ETF) exposure, are experiencing selling pressure as institutional investors reassess risk.

Ripple (XRP) appreciated by 1.5 per cent to $1.92, Litecoin (LTC) expanded by 1.5 per cent to $78.91, Dogecoin (DOGE) rose by 0.8 per cent to $0.1308, Solana (SOL) went up by 0.4 per cent to $127.60, Binance Coin (BNB) grew by 0.3 per cent to $865.40, and Bitcoin (BTC) gained 0.2 per cent to sell at $86,735.17.

On the flip side, Cardano (ADA) depreciated by 1.0 per cent to $0.3802 and Ethereum (ETH) slumped by 0.4 per cent to $2,935.85, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) were flat at $1.00 each.

Economy

Stock Investors’ Portfolios Swell N14bn as Index Rises 0.01%

Published

3 hours ago

17/12/2025

Dipo Olowookere

By Dipo Olowookere

A marginal 0.01 per cent rise was recorded by the Nigerian Exchange (NGX) Limited on Tuesday. This was different from the flattish mode of the market the previous day.

Investor sentiment remained bullish as Customs Street finished with 31 price gainers and 26 price losers, implying a positive market breadth index.

Aluminium Extrusion topped the gainers’ log after it improved its price by 10.00 per cent to N9.35, Guinness Nigeria appreciated by 9.98 per cent to N263.40, Multiverse expanded by 9.95 per cent to N12.15, MeCure Industries also soared by 9.95 per cent to N45.85, and Sovereign Trust Insurance advanced by 9.89 per cent to N4.11.

Conversely, Haldane McCall led the losers’ chart after it shed 9.93 per cent to settle at N3.72, Veritas Kapital lost 9.09 per cent to close at N1.60, LivingTrust Mortgage Bank also declined by 9.09 per cent to N3.50, and Linkage Assurance depreciated by 5.71 per cent to N1.65.

During the trading day, the All-Share Index (ASI) went up by 21.23 points to 149,459.11 points from the previous day’s 149,437.88 points and the market capitalisation increased by N14 billion to N95.281 trillion from N95.267 trillion.

Yesterday, traders transacted 1.0 billion equities for N21.8 billion in 23,701 deals compared with the 553.1 million equities valued at N13.3 billion traded in 28,907 deals on Monday, representing a decline in the number of deals by 18.01 per cent, and a surge in the trading volume and value by 80.80 per cent and 63.91 per cent apiece.

Access Holdings traded 385.8 million stocks worth N7.7 billion, Champion Breweries transacted 111.8 million shares valued at N817.8 million, Sterling Holdings exchanged 85.5 million equities for N589.9 million, FCMB sold 74.7 million shares valued at N791.5 million, and First Holdco transacted 51.9 million equities worth N1.8 billion.