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Nigerian Agriculture firm Ellah Lakes which is still liquidity challenged despite recently receiving N940 million from the Central Bank of Nigeria (CBN) Real Sector Support Fund for oil palm plantations has decided to raise more capital.
Its hilarious to us at MoneyCentral, because the unanswered question is who would be brave enough to lend money to a firm that made just N140,000 in revenues in its third quarter (Q3) financial period that ended in 30th April 2022, but had administrative, personnel expenses and finance costs that totaled N131.88 million for the period.
In a filing made to the Nigerian Stock Exchange, Ellah Lakes Plc said that at its Extraordinary General Meeting, held at Workstation, 7, Ibiyinka Olorunbe Close, Victoria Island, Lagos on the Thursday, 26th day of May 2022, the following resolution was proposed and passed:
“That the directors be and are hereby authorised to raise additional capital whether by way of debt, equity, or a mixture of both, or via public offering, private placement or right issue in such tranches, series or proportions and such prices or interest rates, within such maturity periods, at such dates and time and on such terms and conditions as may be determined by the directors, subject to the requisite approval of the relevant regulatory authorities.”
However, Ellah Lakes results for the period ending April 2022, shows that the firm which could be defined as a zombie company, made a loss of N131.65 million.
At MoneyCentral, we define zombie companies as corporations whose cash flow is not sufficient to even cover their interest on its debts, let alone other expenses.
The agricultural services firm had loans outstanding of N2.435 billion for the period. Other liabilities for the period including trade and salary payable amounted to N633.22 million.
Let’s remember that this is a company that made only N140,000 in revenues for the period.
Mid tier Nigerian lender, FCMB is listed as a major creditor of Ellah Lakes with N100 million in unsecured loans and N940 million in non-current secured lending for a total exposure of N1.040 billion in loans outstanding to Ellah Lakes.
Related party transactions include N309.64 million liable to CBO Capital Partners Limited.
Ellah Lakes Plc which is listed on the Nigerian Stock Exchange closed trading at N3.12 per share yesterday for a market capitalisation of N6.24 billion.
Dont ask us how, because we at MoneyCentral cannot explain the valuation.