Forte Oil suspends N20bn fresh capital  
By Kayode Ogunwale

 

FORTE Oil has put a planned N20 billion share sale on hold, after it received regulatory approval for the offer, due to restructuring, it said on Wednesday.
“The board has taken a strategic decision to put the offering on hold pending the conclusion of an ongoing corporate restructuring with respect to maximising emerging opportunities in the Nigerian energy sector,” it said in a statement.
In August, Forte Oil said it was in talks with a major refinery to form a strategic partnership for local refining of petroleum products in Africa’s top oil exporter.
Group Executive Director, Finance and Risk Management, Mr. Julius Omodayo-Owotuga recently said Forte Oil’s diversification strategy requires additional capital.
He stated that shareholders of the company had earlier issued a mandate to raise fresh funds of up to N100 billion; out of which N9 billion has only been raised.
He explained that proceeds from the N20 billion fresh capital will be used to intensify the company’s working capital.
He disclosed that the company has approached the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) to seek approval for the proposed N20 billion fresh fund raising.
Why explaining reason for raising additional capital Owotuga said because of the margin in downstream business, the company cannot continue to use only debt, “we have to bring in additional equity”, he said.
“Because we are import dependent, we import all our products and the devaluation by the Nigeria government has increased the capital requirement of our business.
What we used to buy for N6 billion when exchange rate was N155 today that exchange rate is between N306 and N380 depend on where you are buying from, it means is about N12 to N15 billion to buy the same product, so the capital requirement of the business has increase significantly.
We responded to this as a business as we raised N9 billion capital last year, we issued five years bond at 17.5 percent”, Owotuga said.