Inside Details As Dangote Shops For $1.1Billon To Meet Refinery Deadline

Fitch, the highly recognized global rating agency says billionaire Aliko Dangote needs another $1.1Billion (estimated N900billion) to meet the deadline for the completion of his refinery.

This is against the background of the disclosure by the globally rated agency that Dangote Industries Limited (DIL) has an ” estimated total external group debt of USD3.8 billion” hanging on its neck.

Fitch labeled the assessment “moderate”.

A development that puts meeting the anticipated 2023 deadline for Dangote Refinery seen as a major national economic lifeline at risk.

Explaining the “limited financial flexibility” that Dangote is struggling with over the refinery project, Fitch pointed out that it doesn’t see creditors providing the needed funding but sees the sale of Dangote cement bonds, stakes in the refinery (NNPC already acquired 25% stake at $2.5 billion) as “likely options.

“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 declared.

Dangote Industries Limited oversees the businesses of the billionaire rated as Africa’s richest.

The agency also warned of the “dominance of Aliko Dangote, as CEO and the main shareholder, in operations as an additional risk”

Stating its position under the subheader “Weak Corporate Governance”, Fitch asserted that “DIL has a complex group structure with a large amount of related-party transactions, with a negative effect on operational and financial transparency. The Group structure may be further complicated by the Nigerian National Petroleum Corporation’s 20% stake in the refinery Project. We also view the dominance of Aliko Dangote, as CEO and the main shareholder, in operations as an additional risk.”

However, despite these concerns, the agency assigned Dangote Industries Limited (DIL) a Nigerian National Long-Term Rating of ‘AA(nga)’ with a Stable Outlook and “an expected National rating of ‘AA(EXP)(nga)’ to the senior unsecured notes to be issued by DIL’s SPV, Dangote Industries Funding Plc’ but noted that ” The final instrument rating is contingent on the receipt of final documentation conforming with information already reviewed.”

“DIL is planning to establish a local bond programme amounting to USD750 million to partially finance the completion of its refinery and petrochemical plant. Dangote Oil Refining Company Limited (DORC) and Dangote Fertiliser Limited (DFL), DIL’s subsidiaries, will be co-obligors under the proposed programme”the agency provided insight.