BUA Cement has said that among the reasons for raising N115bn Series 1 corporate bond is to enable it to compete with other big cement production companies in the country.
Nigeria’s cement industry has become highly competitive with Dangote cement having about 60 per cent of the market share.
As of last year, the manufacturers had a combined capacity of 60m tonnes, with Dangote’s three production facilities in Nigeria capable of producing up to 29 million tonnes of cement a year.
WAPCO has an installed cement production capacity of 14.1 million metric tonnes per annum, while BUA has a total capacity of 8m tonnes annually.
BUA CEO, Engr Yusuf Binji, said on Tuesday during the closing gong ceremony to mark the success of its Series 1 corporate bond unsubordinated bond listing in the new NGX Group era that it would be the country’s second largest manufacturer in the next 30 months.
This is partly attributed to the $1.05bn agreement signed with Sinoma CPMI of China that will raise its production target by 9m tonnes per annum to 20m tonnes per annum within 30 months.
He said, “As part of the growth strategy, we took the deliberate decision to access the debt capital market with the intent to raise N100bn in the first trench of our N200bn debt programme.
“However, giving the overwhelming response which was in excess of N130bn, and in accordance with the securities and Exchange rules and guidelines, we accepted N115bn as the total subscription amount.
“For us, this was clearly an assessment of our viable business model and our continuous strong financial performance which resulted in BUA Cement being assigned investment grade rating by foremost frating agencies Agusto & Co and GCR Ratings and the strength of our product offerings in the marketplace.
“Through the issue we hope to achieve the following: first sustain our competitiveness considering we have already commenced the construction of a 3m metric tonnes per annum line at Sokoto State.
“Second it reduced our cost of capital through the mix of debt and equity by taking advantage of the low interest rate environment and thirdly, we met some of our working capital requirements.
He noted that upon completing and commissioning its expansion project this year, BUA Cement would become the second largest manufacturer of cement in the country with a total output capacity of 11m tonnes per annum across two states in Edo and Sokoto.
Binji said the expansion of its capacity was “in a bid to ensure the cement requirements of Nigerians are properly catered for, while further positioning for foreign market.”