Dangote Cement Plc has obtained approval from the board of the company to access debt funding options in the capital market.
The announcement for the regulatory approval from the board was contained in a press release issued by Dangote Cement during trading hours today, the 25th of March 2021.
The cement behemoth added that this will help to stimulate the company’s business growth across its operating segments, as the cement manufacturer moves to expand operations by maximizing available sources of debt funding and other options available in the capital market.
In line with this, the proposed funding will be used for capital expenditure of the company’s expansion projects, short-term debt refinancing, and its growing working capital requirements.
Providing more information on the approval, the cement manufacturer also revealed its intentions to explore medium to long-term debt funding options through the debt capital market, subject to favourable market conditions.
Dangote Cement had posted a record high revenue of N1.03 trillion in 2020, making it the second Nigerian listed corporate entity after MTN to surpass the N1 trillion mark. The cement behemoth’s revenue expanded by 16% year-on-year to N1.03 trillion, with about N720bn of the revenue generated from its operations in Nigeria.
According to the information contained in the company’s audited statement, the total borrowings of Dangote Cement Plc as of 31st of December 2020, increased from N351.4 billion at the end of 2019 to N483.1 billion in 2020.
The increase in total borrowings can be pegged on the increase in the short-term dollar-dominated loan the company received from banks, and also the “series 1 Naira bond with a value of ₦100 billion and a coupon rate of 12.5%” which the company issued in 2020.
Despite the increase in its total borrowings, the cement manufacturer has been very strategic with its operating and financing costs, in line with its cost optimization strategies.
At the end of 2020, Dangote Cement incurred a total of N44.0 billion as finance costs, which is significantly lower than what it incurred a year ago, in 2019 (N57.7 billion).