Oando sells shares in downstream sector for N54.9b

OANDO Plc, an integrated oil and gas company, has agreed to sell an equity stake of its downstream business to HV Investments for $276 million.

As part of the deal, the HV Investments II B.V. (HVI), a joint venture owned by a fund advised by Helios Investment Partners and the Vitol Group, and Oando, would each have a 49 per cent voting rights; and a Nigerian Helios affiliate two per cent.

The deal, according to Oando, in a statement yesterday, was brokered at $276 million, conditional upon the receipt of regulatory approvals and subject to customary purchase price adjustments, including working capital. It added that: “Pursuant to the acquisition, a special purpose vehicle will hold 100 per cent of the economic interests and 49 per cent of the voting rights of Oando Downstream.

“The total consideration of $461.3 million will be funded by a $276.8 million cash contribution from HVI, and $184.5 million in preference shares issued to Oando Plc, subject to customary purchase price adjustments, including working capital and long-term debt.

At closing, HVI will own 60 per cent of the special purpose vehicle, while Oando Plc will hold a 40 per cent stake,” it stated. Commenting on the transaction, Chief Executive Officer, Oando Plc, Wale Tinubu, stated, “This transaction is an exciting development in downstream West Africa.

By working with Vitol – a global energy and commodities company and the largest independent trader of energy products; and Helios – a premier Africa-focused private investment firm; Oando Plc has repositioned Oando downstream for a new era of investment growth and profitability.

“Importantly, the divestment enables Oando Plc to focus on its upstream and midstream businesses. Even as proceeds of the sale will be applied almost entirely to reducing Oando’s leverage, we underscore the portfolio rationalization achieved alongside the balance sheet optimization,” he said.

Oando downstream businesses primarily consist of; Oando Marketing Plc (OMP); Oando Supply and Trading Limited (OS&T); Oando Trading Limited (Bermuda) (OTB); Apapa SPM Limited and Ebony Oil and Gas Limited. During a mid-year teleconference with investors and analysts in July 2014 to announce the conclusion of Oando’s game-changing $1.56 million acquisition of ConocoPhillips Nigerian assets, Tinubu had hinted at the probability of a shift in Oando’s strategy to focus on the implementation of a three-pronged approach to reduce debt, diversification into the higher margin upstream, and an increased growth margin value for shareholders through an augmented production portfolio and cash flow.