February 20, 2012
Chellarams Plc last week raised N540 million through bond issuance meant to replace infrastructure and invest in its associated companies.
The bond, which was approved by the Securities and & Exchange Commission (SEC) is the Series 2 Senior Unsecured Floating Rate Bonds under the N5billion Chellarams Plc Medium Term Note Programme.
The offer documents made available at the completion board meeting in Lagos, in respect of the offer for subscription showed that the N540 million bond, which has a coupon of Monetary Policy Rate(MPR) plus five per cent would be due on February 17, 2019.
It has an issue price of N1, 000 per unit and was assigned a ‘‘BBB-’ and ‘BBB-’ rating from Global Credit Rating and DataPro Limited respectively.
This is the 2nd Bond issued under the N5 billion Chellarams Plc Medium Term Note Programme. The first bond issuance was for N1.5 billion in December 2010.
Commenting on the N540 million bond, Managing Director/Chief Executive of Dunn Loren Merrifield, the Issuing House/Book Runner, Mr. Sonnie Ayere, said the Bond issuance was a reflection of the appeal of the Corporate Bonds market.
“Furthermore, the rich history of the Chellarams Plc spanning over 60 years in Nigeria and the success of the series 1 issue contributed in no small measure to the Series 2 bond issuance.”
Ayere noted that the proceeds of the bond would be applied by Chellarams towards replacing infrastructure, investment in associated companies (Dynamic industries and Woolworths Retails Stores), Woolworths Retail Store is a 50/50 joint venture with Woolworth South Africa.
According to him, 55.56 per cent of the issue proceeds would be used to refinance maturing debt obligations to reduce the company’s interest burden.
Chellarams Plc was incorporated as a private limited company on August 13, 1947 and was listed on the Nigerian Stock Exchange as a public company on November 29, 1990.
The principal activities of Chellarams Plc and its subsidiaries comprise of distribution, trading, assembling of motorcycles and bicycles, manufacturing of bakery products, packaging materials, chemical supplies, retail clothing, electronics, packaging of milk products and other dairy products.