The Security and Exchange Commission (SEC) has given approval for the extension of the ongoing Oando Plc N54.6 billion Rights Issue to February 20, 2013.
This is on the back of an industrial action by pensioners of the Nigerian Postal Service in January 2013, resulting in the disruption of Rights Circulars to majority of Oando’s shareholders. The offer has been extended to enable more shareholders exercise their rights.
Oando is issuing 4.548 billion shares at N12 per share by way of Rights Issue offer to existing shareholders. The Rights Issue is to enable the energy firm raise N54.6 billion to re-finance acquisitions made in the upstream sector of Nigeria’s oil and gas industry, as well as strengthen its balance sheet.
The move comes at a time when market analysts are projecting a bullish run for the shares. Meristem Securities Limited, projected that the price of the equity will hit N22.14 within the year and placed a ‘buy’ recommendation on the stock, which they expect to go bullish in the course of the year.
Similarly, analysts at FSDH Securities Limited have projected a price of N19.12 for Oando shares. “Applying a Relative Valuation method to derive the value of ordinary shares of Oando, we arrived at a fair value of N19.12 per share. The current market value of Oando share is about N14 while the Rights Issue price is N12.00. This means that the Rights were offered to shareholders at a discount to the market price while the market price is also trading at a discount to our fair value. On the basis of this, we recommend that existing shareholders take up their rights” they said.
According to analysts, looking ahead, they consider that some factors will boost the operations of the company. The factors include: strategy to increase its presence in midstream and upstream where there is opportunity for higher profit margins and the passage of the oil and gas industry reform, macro and social economies stability in the country.
Considering that the Nigerian economy is largely oil-dependent, with 95 per cent of foreign exchange earnings and about 80 per cent of budgetary revenues emanating from the sector alone, some market analysts believe that the ongoing represents an opportunity for a low cost route into Nigeria’s attractive energy sector.“At the Rights Issue price of N12.00, Oando is valued at a steep discount to Emerging Market Integrated Energy (EMIE) peers, considering a range of valuation metrics,” one of the financial analysts said.