Dipo Olowookere
By Dipo Olowookere
In order to meet up with its expansion plans, one of the makers of fertiliser in Nigeria, Notore Chemical Industries Plc, may need at least N40 billion.
According to a report by Reuters on Friday, the board will first need the approval of shareholders of the company to raise this fresh capital.
Last month, Business Post reported that the Group Deputy Managing Director of Notore, Mr Ohis Ohiwerei, had assured that the company will take various steps to boost profitability in the current financial year.
One of the ways listed to achieve this goal was to explore various financial initiatives to reduce the finance cost and diversify revenues to boost profitability.
In its financial results for the year ended September 30, 2019, the fertiliser manufacturer recorded a decline in revenue to N21.4 billion from N26.8 billion, while the gross profit reduced to N4.0 billion from N9.6 billion, with operating profit going down to N3.4 billion from N9.2 billion.
In the period under review, the company declared a loss before tax of N10.3 billion against N3.5 billion a year earlier and a loss after tax of N5.8 billion in contrast to N1.9 billion 12 months ago.
Thereafter, its auditors, PwC, pointed out that Notore may be unable to realise its assets and discharge its liabilities in the normal course of business.
But the management said it was addressing the issues raised and has “embarked on a Turn Around Maintenance (TAM) of its production plant and equipment to improve its reliability and increase production output.”
It further explained that, “The TAM programme will involve replacement/rehabilitation of some critical production equipment, stock up of some critical equipment spares and acquisition of a back-up 44 megawatts gas turbine.”
Quoting the company on Friday, Reuters said Notore plans to seek shareholder approval this month for the N40 billion capital increase.
It reported that the Chief Executive Officer of the firm, Mr Onajite Okoloko, explained that the funds would be used to boost access to capital to fund the company’s growth.
The firm was quoted as saying that it plans to gather its shareholders on Thursday, March 26, 2020, for the approval.
It further said it may raise the fresh capital through public offering or sell to existing shareholders via rights issue, or get the funds via bonds as a standalone or under a programme through book building.
Business Post reports that share price of Notore has remained static at N62.50 for a long time at the Nigerian Stock Exchange (NSE). The company has a Below Listing Standard (BLS) mark on its counter at the exchange due to its free float deficiency.
At the close of business last Friday, only five units of the company’s stocks were traded at Customs Street, the headquarters of the NSE in Lagos.
