Dangote Cement in 2024 obtained a loan of USD675,000,000 from the African Export–Import Bank (Afreximbank) and advanced the same amount to its parent company Dangote Industries Limited (DIL) owner of a newly constructed 650,000 barrels per day refinery, calling into question related party transactions at the cement manufacturer.
“A loan of USD675,000,000 obtained from Afreximbank. The loan has a grace period of 24 months, with repayments to be done in quarterly equal instalments from the end of the grace period up to the maturity period of 60months. Interest charged at Secured Overnight Financing Rate (SOFR) plus margin of 6.5% on the outstanding principal is payable quarterly. The loan is secured by an all assets debenture. This amount was advanced to Dangote Industries Limited (DIL) under similar terms and conditions,” Dangote cement said.
The loan was booked under Bank loans in Dangote Cements Full Year 2024 financials which had an outstanding balance of N1.261 trillion, according to data seen by MoneyCentral.
It is not known why DIL did not seek for the loan directly from a financier and put the transaction directly on its balance sheet.
The transaction was flagged as a Key Audit Matter by the firms Auditors KPMG. These are matters that were of most significance in the audit of the consolidated and separate financial statements of the current period.
“Refer to material accounting policies (Note 2.3.1, 2.3.2 and 4.2.6) and related disclosures (Note 18.2 and 31.2) of the separate financial statements,” KPMG said.
Dangote Industries Liquidity and Debt Structure
Dangote Industries (DIL) had senior secured syndicated debt of USD2.0 billion at end-2024 (largely due in 2025 and 2026) and a USD1.65 billion loan from its ultimate parent, Greenview plc, classified as on demand debt, according to Fitch.
The company has also senior unsecured debt to finance capex at various subsidiary levels.
Fitch Ratings last month withdrew Dangote Industries Limited’s National Long-Term Rating and senior unsecured rating of ‘B+(nga)’, while maintaining them on Rating Watch Negative (RWN), over refinancing risk related to loans used to construct its 650,000 barrels per day refinery.
“The RWN reflects the uncertainty related to the group’s ability to repay or refinance maturing debt in 2025, with the earliest maturity in February 2025.,” Fitch said in a market update.
Fitch said it will no longer provide ratings or analytical coverage for Dangote Industries Limited and has withdrawn them for commercial reasons.
Dangote Industries has immediate debt servicing requirements related to the syndicated loan raised to finance the refinery construction within Dangote Petroleum Refinery and Petrochemicals (DPRP), which faced delays and cost overrun, Fitch said.
During the nine-months 2024 period, the refinery operated at around 50% of its capacity, leaving EBITDA generation below Fitch’s previous projections.
The company is in talks with its lenders to refinance the debt under new terms, which could include amendment and extension of the overall debt maturities.
DIL is a major related party to Dangote Cement
Dangote Industries Limited (DIL) owns 86.67 percent of Dangote Cement’s outstanding shares or 14.62 billion shares.
DIL is set to receive N438.64 billion as dividends from Dangote Cement for the 2024 financial year.
On 28 February 2025, a dividend of ₦30.00 (2023: ₦30.00) per share was proposed by the directors of Dangote Cement for approval at the Annual General Meeting(AGM). This will result in dividends payment of ₦502.6 billion (2023: ₦502.6billion).
The dividend payment represents a 100% payout ratio (Dangote Cement recorded after-tax profit of N503.27 billion in 2024), which is odd for a company with total borrowings of N2.511 trillion and with N1.125 trillion of that amount repayable within one year
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