TAK Agro Plc, a key player in Nigeria’s agricultural value chain, has raised N15 billion senior secured bonds to finance the acquisition of key infrastructure that will enable it to advance its role in enhancing yield and reduce wastages in the Country’s agricultural industry.
The bonds were issued through book building by the Issuing House, Planet Capital Limited, with a clearing price of 16.49 percent payable semi-annually in arrears.
Senior Secured Bond means a debt security that is issued by a limited liability company, partnership or trust and secured by a valid priority perfected security interest on specified collateral.
The bond issuance which is the first agricultural value chain finance in the Nigerian Capital Market has a tenor of 7 years and will be due by 2026. Proceeds of the bond will be used by TAK Logistics Limited, sponsors of the Issuer, to purchase 250 trucks out of its over 1,000 truck requirements.
“Our logistics operation is central to the operations of the TAK Agro Group,” said Chuma Henry Maduekwe, Managing Director of TAK Logistics Limited at the signing ceremony on Friday last week at the Annex Explorers, Federal Palace Hotel & Casino, Victoria Island Lagos.
Maduekwe said the company engages in the movement of fertiliser raw materials, such as phosphate, potash, limestone, and urea from ports and local locations to various fertiliser blending plants under the Presidential Fertiliser Initiative (PFI). The blended fertilisers are delivered to agro-dealers, farm gates, and distribution/aggregation centres.
“TAK logistics move grains/farm produces from aggregation centres to silos and warehouses and helps in the distribution of silos-processed farm produce to food processors, manufacturers or end-users,” he said.
Maduekwe added that the logistic arm of the business had transported over 30,000 truck trips of fertiliser which was a huge logistics undertaking and a scenario with very many challenges.
He noted that the company currently owns no trucks and has been engaging third party transporters to meet its logistics requirements.
However, the company has suffered from low cycle-time due to the limited availability of trucks and challenges within the transport logistics sector in Nigeria.
“For instance, any fertiliser that does not get to the farmer before the planting season is too late for that season,” he further said.
He explained that the fertiliser will have to be stored till the next planting season and that comes with huge carrying costs and risks.
He explained that truck-hiring cost keeps increasing every month because the transporters know that users such as TAK are at their mercy as there are no alternatives.
To foster efficiency in its delivery system, he said the company is raising funds through the bonds to purchase 250 trucks to help control a portion of the total transport logistics requirements.
The acquisition of trucks, according to him, would see performance improvements in the coming years, as well as a hedge against over-dependence on third party transporters.
Speaking also during the bond signing ceremony, Thomas Etuh, chairman, TAK Agro Group, said the company went into agricultural transportation to improve the storage and transportation of food grains across the country.
According to him, the company’s silo capacity for storing grains is 261,000 metric tons, while warehouse capacity is 150,000 metric tons. This brings the cumulative to 411,000 metric tons.
“This enables it to handle thousands of tonnes of food grain from farmers and agro-businesses,” he said.
The company’s silo structures, he explained, follows a scientific method of storing grains, which enables bulk preservation of produce for longer periods.
Etuh said that investors gave impressive reception to the bond issuance as they oversubscribed the bonds by 13%
