Dangote Seeks to Offload 12.75% Stake in Refinery Amid Looming Debt Repayment Deadline

Africa’s richest man Aliko Dangote is seeking to offload a 12.75% stake in his 650,000 barrels a day refinery to help repay significant debt facilities maturing on 31 August 2024.

Dangote Industries Limited (DIL) has immediate debt servicing requirements related to the syndicated loan raised to finance the construction of Dangote Oil Refining Company, according to Fitch Ratings.

“Further delays in meeting the funding requirements would significantly increase the likelihood of financial restructuring or default,” Fitch ratings said in a note yesterday when it downgraded the holding company DIL.

The group has senior secured debt raised at subsidiary levels amounting to USD2.7 billion at end-2023 representing 49% of total group debt.

The debt structure also includes an on-demand shareholder loans from its ultimate parent Greenview plc, amounting to USD2.3 billion representing 43% of total debt.

The company has also raised senior unsecured debt amounting to NGN350 billion with long dated maturities in 2029 and 2032 to finance capex requirements.

In 2021, Nigerian National Petroleum Corporation (NNPC) acquired a 7.25% stake in DORC’s project entity for USD1.0 billion, with an option to purchase the remaining 12.75% stake by June 2024.

Since the option has not been exercised, the group plans to divest a 12.75% stake in DORC in 2024. The group intends to service its significant syndicated loan maturing in August 2024 from the equity divestment.

“However, timely divestment and meeting the imminent maturity is highly uncertain in our view,” Fitch Ratings said.

Dangote had earlier tried to sell a stake in his refinery to the Saudis for a deal to be done either through the Saudi Sovereign Wealth Fund (SWF) or Saudi Aramco, sources told MoneyCentral last year.

This was recently confirmed by a December 2023 report by Energy Intelligence which said Dangote approached Saudi Arabian officials with an offer to sell a stake in the refinery.

The Dangote Group has in the past, done deals with state controlled entities from the Middle East.

Investment Corp of Dubai (ICD), the state fund which holds stakes in some of the Emirate’s top firms, bought a $300 million stake in top African cement producer, Dangote Cement, in 2014.

In 2019 Dangote held a meeting with Saudi Aramco, on investment opportunities in Africa, and a possible collaboration between Dangote Refinery and the Saudi Arabia oil ministry.

However this may be the worst time to get a deal done for Dangote as a global stock-market selloff intensified Monday cutting asset prices from Bitcoin to oil.

The 650,000 barrel-per-day refinery was built at a cost of $20 billion by Africa’s richest man Aliko Dangote.