Breaking NEWS:
AFRICA’S Richest Billionaire, ALIKO DANGOTE financially broke, seeking to borrow $1.1 billion (900 billion Naira) for Refinery Project–Fitch, world’s biggest global rating agency
… Already exhaust all cash in other projects, funds loaned Dangote Group of Companies not enough to finance Refinery Complex completion by 2023, can only raise fund through sale of Dangote Cement bonds
*‘Dangote Industries suffering from weak corporate governance. It is a risk for Aliko Dangote to remain largest shareholder and CEO of the project who already has a lot of power over operations’
*“In the report, Fitch said: “Dangote Industries Limited has a complex group structure with a large amount of related-party transactions, with a negative effect on operational and financial transparency. We also view the dominance of Aliko Dangote, as CEO and the main shareholder, in operations as an additional risk”
*BY SAMSON SHOAGA/MANAGING EDITOR, London & BY AHMED NURENI/ GROUP BUSINESS Editor, Abuja
THIS is not a cheering news for Africa’s richest billionaire, ALIKO DANGOTE, as Fitch, world’s biggest global rating agency has come out with a damning report based on a thoroughly reviewed business data confirming that the Nigerian billionaire is running out of funds, ‘financially broke’, looking to borrow a hefty sum of an additional $1.1 billion to complete his refinery project by the year 2023. The report revealed that Dangote’s dominance as Chief Executive Officer and the main shareholder at Dangote Group of Industries has generated a negative effect on the operational and financial transparency of the company. In so doing, created an additional risk to the success of Dangote Industries Limited.
According to the report, Dangote has invested all his cash and even borrowed to finance the refinery project, The report claims that the only way Dangote can raise money is through the sale of bonds by his cement company, Dangote Cement.
A new report claims that Africa’s richest man, Aliko Dangote, does not have the kind of money needed to complete his refinery by 2023
The report published by Fitch, the world’s biggest global rating agency, alleges that the Nigerian billionaire requires an additional $1.1 billion (900 billion) to complete the refinery but has invested all his cash and even borrowed to finance the refinery project.
According to the report, the Dangote refinery project is still on track to be completed by 2023 and requires an additional USD1.1 billion capex in 2022 to be partly funded by the new bond.
The report adds that Dangote Industries Limited, DIL, is planning to establish a local bond programme amounting to USD750 million to partially finance the completion of its refinery and petrochemical plant. DIL’s subsidiaries – Dangote Oil Refining Company Limited (DORC) and Dangote Fertilizer Limited, DFL -will be co-obligors under the proposed programme.
“Funding for the completion of the refinery project is expected to be partly covered by proceeds of the new bond. If the transaction is not successful, or should completion costs overrun or market conditions in the cement or urea sector deteriorate materially, we do not believe that DIL’s existing creditors would have further lending capacity. We believe that further asset sales, either in cement or stakes in the projects, would be the more likely options to address funding of the refinery.”
Fitch also noted that Dangote Industries suffers from weak corporate governance, adding that it’s a risk for Dangote, who already has a lot of power over operations, to remain the largest shareholder and CEO of the project.
In the report, Fitch said, “DIL has a complex group structure with a large amount of related-party transactions, with a negative effect on operational and financial transparency. We also view the dominance of Aliko Dangote, as CEO and the main shareholder, in operations as an additional risk.”
Fitch concluded its report by saying that the refinery project is expected to sustain strong margins and yield solid cash generation, adding diversification to DIL’s profile and allowing rapid deleveraging.
“Once operational, we expect this project to contribute around USD1 billion to EBITDA annually when ramped up from 2024,” it added.
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