Flour Mills of Nigeria Plc says it plans to raise N40bn through a rights issue to existing shareholders.
The plan, according to a statement on Thursday, has been endorsed by the company’s shareholders.
The Chairman, Flour Mills, Mr. John Coumantaros, was quoted as saying at an extraordinary general meeting in Lagos that the fund would help the company to reduce its debt burden, lower its interest charges and to augment its working capital.
He said with the proceeds of the rights issue, Flour Mills would be strongly positioned to pursue high growth business opportunities without straining its liquidity.
Coumantaros said, “The foreign exchange market is getting tough and we have to find ways to manufacture locally. We are undertaking a very big investment programme.”
The shareholders also approved the resolution authorising the directors to increase the company’s authorised share capital from its current N2bn to N2.5bn, the statement said.
“You will recall that during the last five years, Flour Mills had embarked on a major expansion programme in our core food, agro allied, logistics and support businesses. We also undertook strategic acquisitions and mergers. These were aimed at strengthening, consolidating, re-focusing and supporting our core food business,” the chairman said.
He listed some of the investments that had been undertaken by Flour Mills to include the inauguration of a new sugar refinery at Apapa; the development of a 10,000-hectare sugar estate and mill in Sunti, Niger State; an ultra-modern pasta factory at Agbara, Ogun State, among others.
“Most of these projects are now operational and making steady and impressive progress. Your directors are therefore optimistic that the project will deliver good returns, positive cash flow and continue to make appreciable contributions to Flour Mills topline and bottomline growth in the coming years.
“Unfortunately, this period of strategic expansion has coincided with the sudden slump in global crude oil prices from November 2014 which resulted in major devaluation of the naira and caused increases in our import costs and financial charges,” Coumantaros told the shareholders.
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