High debt: Oando divests stake in local gas firm for $41.5m

Motolani Oseni

As part of strategy to reduce its high debt profile, Oando on Thursday announced the divestment of its 25 per cent stake in local gas and power company Axxela to majority investor Helios Investment partners for $41.5 million.

It is also, worthy of note that Oando in 2015 hived off its power and gas subsidiaries, selling a 75 per cent stake in the new business, Axxela, to Helios for $115.8 million in 2016.

The Soros-backed private equity firm now owns 100 per cent of Axxela following Oando’s divestment, Axxela said on Thursday.

Axxela said it delivers up to around 80 million standard cubic feet (scuf) per day to over 160 industrial and commercial customers.

“This transaction favourably positions us to significantly reduce our debt profile and remain focused on growth through our dollar denominated businesses,” Oando said in a statement.

On Wednesday, Oando’s chief executive – Adewale Tinubu – said the Nigerian oil company aimed to raise fresh capital over the next two years and cut its long-term debt after it bought Conoco Phillips’ Nigerian assets for $1.5 billion in 2013.

Tinubu told Reuters he was confident with the capital raising initiatives and that over the next 24 months Oando would raise funds as plans were far advanced.

Oando said on Thursday that it would use the proceeds of the Axxela stake sale to repay part of the group’s term loan.