Private-equity firm switches $10 million debt for equity
C&I Leasing might use share sale to dilute Abraaj’s holdings
Abraaj Group, the private-equity firm that collapsed after defaulting on debt, will get a 70 percent stake in C&I Leasing Plc by converting a $10 million loan into equity in the Nigerian company.
“Abraaj knows that pulling out $10 million will be detrimental to the growth of the business, so rather than cash out, they decided to convert,” C&I Chief Executive Officer Andrew Otike-Odibi said by phone from Lagos. Once done, C&I plans a rights issue or an initial public offering that may dilute Abraaj’s stake to about 30 percent, he said.
Abraaj, once one of the most high-profile private-equity companies in the Middle East until its dramatic failure last year, is being restructured by liquidators in a bid to settle more than $1 billion of its debts through asset sales. The firm’s Lagos office didn’t respond to an email seeking comment.
The share capital so reduced will be added the company’s share premium account.
The purpose of the reconstruction was to allow the company to have enough unissued shares to accommodate the conversion of the Abraaj loan stock to ordinary shares and to raise additional capital through the capital market for business expansion.
The firm last traded at N1.78 on the NSE, and is currently on full suspension to enable the company’s registrars to update the register of shareholders.
Results for the half year ended June 2018, shows gross earnings increased from N11.5 billion in 2017 to N12.7 billion in 2018. Profit before tax increased from N614 million in 2017 to N723 million in 2018. Profit after tax also increased from N580 million in 2017 to N682 million in 2018.