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Nairaland Forum / Nairaland / General / Politics / Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts (654 Views)
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Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by MCentral: 10:41pm On Aug 05 |
Fitch Ratings has downgraded Dangote Industries Limited (DIL) due to what it says is the significant deterioration in the group’s liquidity position and uncertainty related to its ability to refinance maturing debt related to the syndicated loan raised to finance construction of Dangote Oil Refining Company (DORC). Further delays in meeting the funding requirements would significantly increase the likelihood of financial restructuring or default and lead to further rating downgrade, according to Fitch. “The downgrade reflects significant deterioration in the group’s liquidity position following lower than expected disposal proceeds, operational and financial underperformance compared to our prior expectations, also affected by local currency devaluation, and lack of contracted backup funding to repay its significant debt facilities maturing on 31 August 2024,” Fitch Ratings said in an update released Monday. “We view the lack of DIL’s audited accounts for 2023 as a corporate governance issue.” DIL has immediate debt servicing requirements related to the syndicated loan raised to finance the construction of Dangote Oil Refining Company (DORC). Dangote Refinery has a nominal production capacity of 650,000 barrels per day (bpd) of refined oil products, which will be sold in both the Nigerian domestic and international markets. During the First Half (1H) 2024 the refinery operated at around 50% capacity and produced between 325,000 bpd to 375,000 bpd. “The EBITDA contribution from DORC has been far below our previous projection,” Fitch said. Major currency devaluation in 2023, also caused the Dangote group to record a significant FX loss of N2.7 trillion in 2023 as the company faces a mismatch between USD denominated debt and domestic revenues. Fitch expects the devaluation to continue at a higher pace in 2024 leading to more losses. 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 said. Fitch expects DIL’s EBITDA margins in cement production to drop further in 2024 following softer retail demand for cement particularly in the Nigerian market as well as limited ability to pass on increased raw material cost to consumers. Fitch downgraded the National Long-Term Rating to ‘B+(nga)’ from ‘AA(nga)’ and senior unsecured debt rating issued by Dangote Industries Funding Plc to ‘B+(nga)’ from ‘AA(nga)’. Fitch has simultaneously placed the ratings on Rating Watch Negative (RWN). The RWN reflects uncertainty related to the group’s ability to refinance maturing debt. https://moneycentral.com.ng/exclusive/article/fitch-cuts-dangote-industries-on-worsening-liquidity-possible-default-on-refinery-debts/ |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by lordm(m): 10:56pm On Aug 05 |
If that refinery fails, many foreign investors will flee, even intending ones will have rethink. Imagine Nigeria does not have a single functional refinery 2 Likes |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by CriminalTinubu(f): 10:58pm On Aug 05 |
Look what Tinubu has done to a whole Dangote. Losses everywhere. No single profit.
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Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by SocialJustice: 11:12pm On Aug 05 |
Business challenges that will be resolved. Nigeria is a dangerous place to do business. Imagine borrowing at 900 per dollar and having to repay at 1650 per dollar. That is enough to kill any business. |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by ObosiLandlord(m): 11:13pm On Aug 05 |
The FG forex policy has put Dangote in a mess. 10 Likes |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by Philipponzaghi: 11:23pm On Aug 05 |
Dangote is a resilient giant; setbacks are part of the journey. The refinery will bounce back stronger, just watch! Let's support our own and hope for better days ahead. Our economy needs this. 10 Likes |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by givedemwotowoto: 11:24pm On Aug 05 |
This is the biggest mistake of the Tinubu government! Dangote will lose a lot of money but he has a voice in the international and local business community Foreign investors will be looking from a distance knowing that if you could do it to your own, then you will do it to them, and no investor wants to lose money like that, there are other viable options around the world begging for their attention. Already they lost 60% of their investments when Tinubu announced the floating of Naira 2 Likes |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by Nonybb: 11:27pm On Aug 05 |
Blame Dangote if the company default on debt repayment. The greediness of Dangote to control the market forces would be his undoing. He doesn't want to play fair and along under deregulated market. He wants a monopoly of the market. What a wicked Marxist |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by Gregorystarrrr(f): 11:53pm On Aug 05 |
Hmm |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by trutharena: 11:55pm On Aug 05 |
Some people just want to see Dangote fail, but this man is a titan. Watch him turn this around and prove them all wrong! 9 Likes |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by DeLaRue: 12:15am On Aug 06 |
'Ebidta contribution from Dangote Oil Refinery has been FAR BELOW our previous expectation'. In layman's language, it means the refinery is not as profitable as expected. On top of that, there is imminent debt repayment around the corner. Mr Dangote is in a bit of trouble. Now I understand why he has been unusually agitated in recent months. |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by DeLaRue: 12:26am On Aug 06 |
The thing with refineries all over the world is the margins (profit) are usually very small. It is a tough business to be in, especially if you have to compete with imports from other refineries. I suspect Mr Dangote assumed he would have the entire Nigerian market to himself so that he would have more flexibility to dictate price. With the government not buying into that agenda, he will find himself in a tough competition. That's even before government 's own refineries start producing. The government will be under pressure to sell at a cheaper price, and Dangote refinery may not be able to compete. We wait and see how all these play out. 2 Likes |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by DeLaRue: 12:37am On Aug 06 |
givedemwotowoto: I don't see why you think the President should be blamed. You mean he should have granted Dangote refinery the sole and exclusive right to sell petrol and diesel in Nigeria? Do you know any country in the world where a private company is the sole supplier of refined petroleum products? What do you think would happen to the price of rice if only one private company has the right to sell rice in Nigeria. We will all be at the mercy of that company as it will increase prices as it pleases. I am sure you would be amongst those who would turn around and blame the President for putting the control of sale of rice in the hands of a single company. You people blame the President for everything. |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by malali: 12:43am On Aug 06 |
My question is 1-Did he build the refinery as a private businessman relying on Nigeria's exclusive patronage 100%. 2-What stops him from buying crude oil and selling petrol independent of Nigeria. 3-Was he expecting Nigeria to partake in his loan payments ? 4-He has imported a lot of crude Oil from Brazil and USA, why hasn't he refined a drop of petrol, is the refinery even functional. 5-Did he really build this refinery to independently operate or operate with 100% government concessions |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by givedemwotowoto: 12:47am On Aug 06 |
DeLaRue: Let’s say what you claimed here is true and Dangote wanted to be sole distributor of refined petrol, did he also tell that if they didn’t grant it, he won’t buy crude from them? Why did they refuse to sell crude to him and instead choose to export crude and import refined petrol from Malta when there’s a refinery in their country? Why does Dangote have to go to other countries to buy crude when the country produces crude? And why did they start propaganda that he was selling dirty petrol if their hands in the matter are clean. Didn’t he invite them? Where are you people getting all these useless stories from corrupt politicians? That you even believe these people who have kept your country where it is today is puzzling to any sane mind 1 Like |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by leokid866: 12:55am On Aug 06 |
givedemwotowoto:but Dangote has said himself he is not owing any foreign banks and all that's left of his loan is 2.5Billion dollars owed to local banks which he will pay back before the end of the year......so why are dragging Tinubu and the country? 9 Likes |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by givedemwotowoto: 1:04am On Aug 06 |
leokid866: Let us see what he’ll tell the north after trying to destroy Dangote’s business Do you know the chain of businesses the dantata family have created in the north? You just decided to frustrate a hard working businessman’s business after collecting over N100 billion naira from him to build a refinery your country has wasted so much money but couldn’t build and maintain Goodluck with investors after trying to frustrate your own |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by leokid866: 1:12am On Aug 06 |
givedemwotowoto:how has Tinubu frustrated Dangote? Long before Tinubu became president he has supported Dangote by creating an enabling environment for him in Lagos so where are you people getting the Narrative that Tinubu is behind Dangotes woes? Even in Dangotes fight against NNPC it was still Tinubu that went to settle the fight so stop spreading trash Narratives I beg..... 8 Likes |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by Available9: 1:17am On Aug 06 |
lordm: Why will dangote refinery work ? Do you want the ones we built outside Nigeria with stolen public funds to fail ? |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by givedemwotowoto: 1:52am On Aug 06 |
leokid866: They collected N100 billion from him and then tried to frustrate him. Immediately he mentioned Malta and tried to expose their asses, and even start doing business abroad and forget Nigerian market, their hands were forced and felt defeated. That’s why they’re trying to sell to him now Let’s see what story he’ll tell them that will earn him any support. They will collect his money and do him shege 1 Like |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by Nukilia: 2:47am On Aug 06 |
givedemwotowoto: This very funny situation can lead to a regime change The current government is set to sabotage Dangote |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by Validated: 3:58am On Aug 06 |
APC is a curse on Nigeria. The destruction that Buhari could not do, Tinubu has done. NNPC is gone, all the refineries are dead, now Dangote is down and about to be swallowed by Tinubu's disastrous failure. Northerners would rather chase Tinubu out of Aso Rock than for Dangote to go down. |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by Salewa97: 6:00am On Aug 06 |
Fitch can say what they want, but Dangote is a master at navigating challenges. With his track record, I believe he’ll find a way to turn this situation around. The refinery is too vital for Nigeria’s future to fail! 9 Likes |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by Svoboda(m): 8:33am On Aug 06 |
Salewa97: 650k bpd refinery is just too big a behomoth for a country like Nigeria. I believe bua was more prudent in cutting his refinery capacity to 240k bpd. Dangotes idea was to dominate the sector with his refinery. Someone told me he wanted an oil lifting license, and thats assuming he becomes the sole oil supplier to nnpc, that'd enable him import petrol whenever his refinery is shutdown for maintenance or repairs. Dangote baulks under the pressure of competition. How he'll turn this economic hellhole he has found himself in is yet to be seen. |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by CorrectionFLuid: 9:42am On Aug 06 |
givedemwotowoto: Guy you fall hand. I read your post. And his reply wasn't to what you said. He forced a narrative on you, and instead of pointing it out, you fell for his gimmick. There is nowhere in your post you referred to making dangote the sole supplier of refined petroleum products. He made that up and forced it upon you, and you just took it. |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by leokid866: 11:37am On Aug 06 |
givedemwotowoto:where are you getting these half truths from? who collected 100 billion from Dangote? And the Malta issue is about those in NNPC who are importing from Abroad a Ministry and it's affiliates been run by the Hausas like him....do if anyone is even trying to frustrate him it's his own people.....all this was before the President weighed in and signed an executive order that a certain percentage of crude produced must be kept for local consumption..... |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by givedemwotowoto: 4:24pm On Aug 06 |
CorrectionFLuid: His point was that they tried to frustrate Dangote because he wanted to be a monopoly. It's a narrative Agbados started bringing up in their own defense. If you watched Dangote's interview a couple weeks ago, he also brought up the issue of him being called a monopoly and debunked the allegation. This Agbado is not the first Agbado to allege that, to which the ending part of my post called nonsense. givedemwotowoto: 1 Like |
Re: Fitch Cuts Dangote On Worsening Liquidity, Possible Default On Refinery Debts by MCentral: 10:32pm On Aug 06 |
Salewa97: We shall see!! |
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