Dangote refinery cuts debt to $5.7bn ahead of record IPO

Africa’s biggest oil refinery cut its debt by $570 million as it raised output and sales ahead of what will be the continent’s biggest share offering, one that could expand by as much as 30% depending on demand.

Dangote Petroleum Refinery and Petrochemicals FZE’s total secured debt was $5.67 billion at the end of June compared with $6.24 billion at the end of last year, it said in its prospectus seen by Bloomberg.

A company spokesman didn’t immediately respond to a request for comment.

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Africa’s richest man, Aliko Dangote, is seeking to raise $1.6 billion in the IPO by selling 4.1 billion shares at 525 naira ($0.40) apiece, but this could swell to about $2.1 billion depending on demand and approval by Nigeria’s Securities and Exchange Commission, the company said in the document.

A swing to profit of $1.82 billion in the six months through June from a loss of $282.1 million a year earlier enabled the debt reduction after the Nigerian facility ramped up production and saw higher sales boosted by the US-Iran war.

Its net debt was 0.27 times earnings before interest, tax, depreciation and amortisation by the end of June, a ratio that the producer expects to decline as operations stabilise and cash-flow generation improves, it said.

The refinery, which processes 700 000 barrels of crude daily, aims to double that capacity by 2030 with a $14.3 billion expansion. That spending “does not constitute an immediate funding requirement,” it said.

The IPO is scheduled to open September 14 and run for about a month. Dangote, the founder, indirectly holds 87.3% of the refinery through different entities, according to the prospectus.

Built at a cost of $20 billion, the refinery transformed Nigeria from a net importer of petroleum to an exporter, also helping to ease this year’s war-related supply shocks in several countries.

The company is targeting November for regulatory approval of allotments as well as the listing of shares.

Investors can participate through 55 intermediaries including digital channels such as Flutterwave Technology Solutions, MTN Group’s MTN MoMo, Moniepoint, Airtel Smartcash and Bamboo, according to the prospectus.

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