Dipo Olowookere
By Aduragbemi Omiyale
One of the flour millers in the country, Flour Mills of Nigeria Plc, is selling commercial papers worth N40 billion to interested investors in the capital market.
The exercise, according to data obtained by Business Post, commenced on Wednesday, February 15, 2023, and will conclude on Monday, February 20, 2023.
The company is selling the corporate debt instrument in two tranches of Series 1 and Series 2, with proceeds from the sale to be used to support its short-term working capital and funding requirements.
The Series 1 has a tenor of 181 days, while the Series 2 has a maturity of 269 days.
The firm stated that the first series is sold at a discount rate of 11.77 per cent and an implied yield of 12.50 per cent, while the second series is offered at a discount rate of 12.28 per cent and an implied yield of 13.50 per cent.
For investors interested in the commercial paper, which is being issued under the organisation’s N200 billion commercial paper issuance programme, they would be required to pay at N5 million.
Though an investment firm in Nigeria, Meristem, has given the exercise a buy recommendation, it, however, expressed “concern about the firm’s weak liquidity position and the illiquidity of the instrument.”
Flour Mills operates in a very competitive environment in Nigeria alongside rivals like Dufil Prima (makers of Indomie noodles), Olam Nigeria, and Dangote Flour Mills, among others. It recently swallowed one of its rivals, Honeywell Flour.
These companies have products competing for the market share alongside Flour Mills, though the management has come up with different strategies to remain relevant in the sector.
