The Dangote Group, Africa’s largest conglomerate, is exploring the sale of a 12.5 percent stake in its newly commissioned refinery as it grapples with liquidity concerns, according to the Global rating agency, Fitch Rating.In 2021,
Nigerian National Petroleum Corporation (NNPC) acquired a 7.25 percent stake in the Dangote refinery’s project entity for $1.0 billion, with an option to purchase the remaining 12.75 percent stake by June 2024.“
Since the option has not been exercised, the group plans to divest a 12.75% stake in DORC in 2024,” Fitch Ratings said in its latest note.Fitch added, “The group intends to service its significant syndicated loan maturing in August 2024 from the equity divestment.
However, timely divestment and meeting the imminent maturity is highly uncertain in our view”.Fitch noted that Dangote has immediate debt servicing requirements related to the syndicated loan raised to finance the construction of the refining company.“
Further delays in meeting the funding requirements would significantly increase the likelihood of financial restructuring or default and lead to further rating downgrade,” Fitch explained.
The company’s oil refinery operated at about 50 percent capacity in the first half of the year, at 325,000-375,000 bpd, Fitch said, while Dangote’s fertiliser business was hindered by inadequate gas supply.
“The EBITDA contribution from the refinery has been far below our previous projection as the facility is ramping up and optimizing production,” Fitch Rating said
