A Fitch report alleges that the Nigerian billionaire requires an additional $1.1 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 $1.1 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 $750 million to partially finance the completion of its refinery and petrochemical plant.
DIL's subsidiaries - Dangote Oil Refining Company Limited (DORC) and Dangote Fertiliser 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 $1 billion to EBITDA annually when ramped up from 2024,” it added.
Latest Stories
-
ORAL: ‘National Cathedral spending is an ‘expensive pit of deceit’ – Ablakwa
5 minutes -
Our people didn’t vote – Bawumia explains why the NPP lost
8 minutes -
Dr Bawumia had no choice given Mahama’s decisive victory – Malik Basintale
15 minutes -
ORAL: ‘Clergy were misled by Akufo-Addo’ – Ablakwa on National Cathedral scandal
19 minutes -
‘It is false’- PMMC refutes claims of politicians smuggling gold from Ghana
37 minutes -
2 million NPP supporters did not turn up to vote – Kabiru Mahama
40 minutes -
IPR Ghana congratulates citizens for peaceful election, calls for unity
1 hour -
Bawumia’s 8 minutes elite ball that zapped the energy of trigger happy politicians
2 hours -
It will be a betrayal if National Cathedral saga does not feature in ORAL’s work – Ablakwa
2 hours -
‘It’s unfortunate we had to protect the public purse from Akufo-Addo’ – Ablakwa on ORAL Team’s mission
3 hours -
Congo lawyers say Apple’s supply chain statement must be verified
3 hours -
Stampede in southwestern Nigerian city causes multiple deaths
4 hours -
Tens of thousands without water in Mayotte as curfew brought in
4 hours -
ORAL: We won’t witch-hunt, we’ll focus on transparency, not revenge – Ablakwa
4 hours -
Attempted robbery: Accused claims he carried cutlass for protection
5 hours