Flour Mills of Nigeria Plc, one of the country’s flour millers, is selling commercial papers worth N40 billion to capital market investors.
According to data obtained by EntrepreneurNG, the exercise began on Wednesday, February 15, 2023, and will end on Monday, February 20, 2023.
The corporate debt instrument is being sold in two tranches, Series 1 and Series 2, with the proceeds going toward the company’s short-term working capital and funding needs.
The Series 1 has a maturity of 269 days, while the Series 2 has a tenor of 181 days.
According to the company, the first series is sold at a discount rate of 11.77% with an implied yield of 12.50%, while the second series is sold at a discount rate of 12.28% with an implied yield of 13.50%.
Investors interested in the commercial paper, which is being issued under the organization’s N200 billion commercial paper issuance program, must pay at least N5 million.
Meristem, a Nigerian investment firm, has given the exercise a buy recommendation, but it has expressed “concern about the firm’s weak liquidity position and the illiquidity of the instrument.”
Flour Mills competes in Nigeria with companies such as Dufil Prima (maker of Indomie noodles), Olam Nigeria, and Dangote Flour Mills, among others. Honeywell Flour, one of its competitors, was recently acquired.
These companies have products that compete for market share with Flour Mills, but the management has devised different strategies to stay relevant in the sector.
