Flour Mills of Nigeria (FMN) Plc on Tuesday said it would commence the process of raising additional capital through Rights Issue and Medium Term Notes(MTN). It hopes to raise N70 billion ($195 million) from this capital raise drive.
Following the high bank charges FMN was paying on borrowings, which drove costs of finance upwards for many years, shareholders of the company, in 2015 authorised the directors to raise up to N40billion of additional equity via a Rights Issue.
However, the directors in July 2016 put the right issue on hold and planned to later raise the funds in three tranches. According to the directors, given the economic headwinds, they decided to undertake the Rights Issue through a Shelf programme (a situation whereby securities are sold over a period of time) to enable the company raise the required funds in several transactions over three year period, ThisDay newspaper reported.
The directors said they have already registered a N40 billion Shelf Programme with the Securities and Exchange Commission (SEC), adding that they would continue to assess the economic climate to determine the most appropriate time to launch the first tranche.
However, in a notification to the Nigerian Stock Exchange (NSE), yesterday, FMN said it would commence with the activities to raise the funds through the Rights Issue and MTN. According to the company, plans are now in progress towards the possibility of commencing with the first tranche of through the Rights Issue. However, the company said the exact amount to be raised in the first tranche would be confirmed in due course.