OANDO Divests 60% Of Local Unit
Oando Marketing Company CEO, Yomi Awobokun says there is no better time to have approved the sale of their majority stake in the downstream business. CNBC Africa’s Wole Famurewa caught up with him business to share his insight on this deal.
FAMUREWA: Is this a good time for this deal?
AWOBOKUN: No better time, it has been on the table for a while, we got share approval 24 months ago to partially diverse, we consider fully diverting, and we have been accosted by different biggest trading companies in the world but top 5 trading companies have come to be part of what we are building in Nigeria. We started this process again last year. The Vitol group came in early Q2 and they moved very quickly, were in line with the philosophy, the largest trading company in the world and are first class traders. Helios as we know is led by a Nigerian, so there is no better time, this is the best time.
FAMUREWA: What is exactly been sold here?
AWOBOKUN: It is the distribution business of Oando PLC, petrol stations, supply business in Nigeria and West Africa, the mix-stream Jetty which is Nigeria’s best kept secret, and it’s a $150 million investment to ensure there is fuel in Nigeria.
FAMUREWA: What about deal structure; can you clarify that, because we have seen 60%, 51% voting right?
AWOBOKUN: Oando will be left with 49% of the shares, Helios nominated Nigerian organisation will be left with 2% and Helios-Vitol will have 49%.
FAMUREWA: Why is it an attractive business?
AWOBOKUN: It’s an exciting industry, its going through its challenges. We believe the government is going to restructure the industry. Oando has always been able to access international capital, we did it for the upstream and downstream business and that capital stays in the country. In addition to helping Oando PLC restructure, it will allow us to invest and increase our stations.
FAMUREWA: I understand that $276 million was to pay down debt for the larger group, will some of the money be used to invest further in the downstream business?
AWOBOKUN: The structure of the deal is that Oando takes $276 million and the company and its shareholders will do as they deem fit with that cash. The new investors are also committed to investing in the downstream. We have about 40 investors that have shown interest, new sites in different states and locations. There are so many opportunities and we need capital at this time to grow that footprint.
FAMUREWA: You are putting money in an industry that has had huge challenges in subsidy; does this fuel deregulation change the game significantly?
AWOBOKUN: The game changer is the consistent implementation of the government policies. The reason is that it’s a fundamental industry, the downstream is going nowhere, it’s in every country in the world, and it’s done professionally.
FAMUREWA: What would you like, given all that has happened?
AWOBOKUN: I would like a perfectly implemented framework.
FAMUREWA: Even though we keep the subsidies in place, it’s all about how it works. How does that seem to you?
AWOBOKUN: If we keep the subsidy in place we should abide by the rules of the game.
FAMUREWA: How are we close to resolving the issues about the subsidies in the past?
AWOBOKUN: We have engaged the transition committee and the new government going in, what we love about the industry is that it is filled with honesty. There is a full appreciation of issues and I think the Country is in for surprises.
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