In what may be a bid to cure its longstanding balance sheet insolvency, the board of Oando Plc, on Monday said it would proposed a fresh capital injection of at least N500bn by shareholders at the the annual general meeting scheduled for August 11, 2025.
Investdata recalls that the external audit firm- Ernst & Young (EY), in its audit of Oando’s 2019 financials drew attention to the group’s total comprehensive loss of N200.6bn for that year, compared to an income of N38.1bn in 2018; and current liabilities that exceeded current assets by N432.8bn, up from N318.5bn in 2018.
Balance-sheet insolvency describes a situation where a company is unable to pay off its debts if it were to sell all its assets at book value, indicating a serious financial situation which if left unattended may lead to bankruptcy.
In a notice of the AGM filed on the Nigerian Exchange Limited portal, directors of Oando have listed among the special business to be transacted at the meeting which will hold virtually from 10:00am, capital raising and restructuring initiatives.
The board is recommending that the additional capital be in Naira or “its foreign currency equivalent in the Nigerian and/or international capital markets “through the issuance of up to 10 billion ordinary shares of 50 kobo each, either as a standalone issue or by the establishment of capital raising programmes.”
The amount is to be raised “whether by way of public offerings, private placements, debt to equity conversions, rights issues and/or other transaction modes, at price(s) determined through book building or any other acceptable valuation method or combination of methods at such dates, and on such terms and conditions as may be determined by the board of directors of the company subject to obtaining the requisite regulatory approvals.”
The directors are also proposing that they be “authorized to enter into capital restructuring agreements with key stakeholders and Lenders and convert up to US$ 300m out of the company’s existing Reserves-Based Lending (RBL) debt into equity, subject to terms and conditions to be determined” by them
The meeting will also consider a proposal authorizing the board “to establish a multi-instrument issuance programme in an amount up to US$1.5bn, or its
Naira equivalent and to proceed with subsequent issuances of bonds, certificates, instruments and/or other securities under the Programme, at such time and on such terms and conditions to be determined by the Directors subject to obtaining all relevant regulatory approvals subject to terms and conditions to be determined by the Board.”
In what may be pre-emptive move, the board is also seeking authority “to accept surplus monies arising from any potential oversubscription from the capital raising programmes, in such proportion as may be determined by the Board, subject to obtaining the relevant regulatory approvals.”
Ahead of the capital raising exercise, the meeting is also being asked to approve an increase in issued share capital and cancel unallotted shares.
