People & Money

Prima Corporation to raise NGN5.0bn; offers attractive yield on 180-day paper

Prima Corporation Limited (PCL), one of the biggest suppliers of caps and preforms to the beverage industry across West Africa, is seeking to raise NGN5bn (or USD12.2mn) from the Nigerian debt capital market.

Precaps and caps are plastic material used in production of PET bottle packages. While the company produces from Nigeria, it directly exports to Ghana, Cameroon, Chad, Niger, and Liberia”.

The issuance will be the first tranche out of the company’s registered NGN30bn (or USD73.0mn) programme. According to the company, it aims to use the proceeds of the issuance to support its short term working capital requirements.

Prima Corporation Limited (PCL), was established in 1965. Over the last 16 years, the company has re-directed its focus on the exclusive production of preforms and caps in Nigeria. Its biggest clientele are companies in the beverage and brewery industry across West Africa.

Precaps and caps are plastic material used in production of PET bottle packages. While the company produces from Nigeria, it directly exports to Ghana, Cameroon, Chad, Niger, and Liberia.

The company has a staff strength of around 202 employees, operates twelve (12) depots and has more than 600 direct customers which include individuals and corporates. However, about 83% of sales are attributable the company’s corporate clients.

Also Read: The $590 Billion Beer Market and Its Five Biggest Competitors

In 2019, the company recorded a turnover of NGN27.0bn (USD65.7mn), expanding by 8.0% y/y from NGN25.7bn (USD62.5mn) in the previous year. However, Profit Before Tax (PBT) declined by 30% y/y to NGN1.1bn (USD2.7mn) from NGN1.6bn (USD3.9mn) in the prior year. The decline in profitability was on the back of a rise in interest expenses which increased by 50% y/y to NGN2.7bn (USD6.6mn).

This shows that the company has a high debt profile.

Prima Corporation is rated A- by DataPro, a Nigerian credit quality issuer. This rating by the issuing agency is based on PCL’s stable earnings, strong business profile as well as its superior liquidity profile.

Based on the offer document, the arranger and dealer on the debt capital transaction is FBNQuest Merchant Bank Limited, a subsidiary of FBN Holdings Plc.

The tenor of the issuance is 180 days at a discount rate of 12.66% (yield of 13.50%). Based on comparable treasury bills in the secondary market, the yield on this offer by PCL is at a premium of 905bps. This means that the company is offering yields that are significantly higher than market rates.

The offer is scheduled to close on Monday (23 August 21), with funding date on Wednesday (25 August 2021).

Abiola Gbemi

Abiola Gbemisola is a seasoned investment professional with over seven years experience across investment research and financial advisory. He holds a Bachelor's degree in Economics from Obafemi Awolowo University and is a CFA Level III candidate. He has been featured on several media platforms, sharing his views and insights on the economy and financial markets.

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