NaijaWire

African Petroleum IPO now open to public

Abuja - The much awaited African Petroleum Plc public offer (IPO), was yesterday opened to the investing public. The offer, which closes on September 29, 2008, followed the approval by  Securities and Exchange Commission (SEC), for the company to raise N110 billion in a hybrid offer of 199, 070, 021 ordinary shares at N250 per share, and rights issue of 262, 929, 279 units at N230 per share. The Nigerian Stock Exchange had earlier granted its approval.

In the last financial year ending December 31, 2007, the company had from a near loss position declared a dividend of N7.05 billion profit before tax. That figure represented an impressive growth of 188.93 per cent over N2.44 billion declared the previous year. Profit after tax also grew significantly from N2.10 billion recorded in 2006 to N5.10bn during the year under review.

Following the superlative performance, the company declared and paid dividend of N7 per share. That dividend payout represented a growth of 600per cent in comparison to the N1 payment in December 31, 2006. Before the N1 pay out last year, the company had not paid dividend to its shareholders since privatisation, when the former core investor, Sadiq Petroleum Limited, bought controlling stake before its subsequent pull out, owing to  discovery of huge debt, which was hidden at the time of due diligence in the run up to its acquisition.

Zenon’s acquisition of 28 per cent of that stake in AP last year marked a remarkable change in fortune for AP.

Its half year result from January to June 30, 2008, shows another very impressive performance of 80per cent increase in profit after tax, which is phenomenal by all standards. The market capitalization of AP has risen from N36, 000, 000, 000 billion before the Otedola-led board took over, to a record market capitalization as at today, of N232, 244, 200, 000 billion.

The company’s upward swing is not unconnected with the reforms and restructuring initiated by the board, while its  sanitisation of the accounting system, restructuring of personnel and clear policy focus appears to have paid off. Only recently at the completion board meeting,  Vice Chairman of the company, Mr Osa Osunde, said with the strong fundamentals AP now boasts of, investors stand a good chance of reaping bountifully from their investment, projecting that the share price might nudge the N500 magic line. He declared triumphantly that AP was back, better and stronger than before.

After the Public Offer, AP will be formalizing its merger with Zenon Petroleum and Gas. Court processes for the merger are expected to commence shortly. AP with a current turnover of about N250, 000, 000, 000 and Zenon with turnover of N340, 000, 000, 000 is expected to produce a mega company of about N600, 000, 000, 000, making it the company with the highest turnover in Nigeria and thus increasing shareholders’ value.

Mr. Femi Otedola, who currently owns substantial majority shares in African Petroleum, is the sole owner of Zenon Petroleum and Gas. He had started Zenon about eight and half years ago from the scratch and  literally transformed the company to the nation’s biggest diesel supplier, with huge investments in maritime, haulage, properties and insurance. Mr. Otedola took over African Petroleum as its chairman and chief executive, when the former Managing Director, Mr. Zira Maigadi, was sacked in September 2007.

The AP shareholders  endorsed the merger at the last Annual General Meeting held in Ibadan, on April 29, 2008.