This rating expires 30 June 2022.
Agusto & Co. hereby upgrades the rating assigned to Axxela Limited (‘Axxela’ or ‘the Company’) to “A-“ to reflect the consistent improvement in profitability performance bolstered by ongoing regional diversification of gas distribution to clients in West Africa, satisfactory and sustainable operating cash flow upheld by favourable terms of trade with gas suppliers and industrial customers evidenced by long term gas contracts, as well as a modest improvement in leverage metrics owing to good funding mix largely supported by refinancing of expensive bank borrowings with a bond issuance at a cheaper interest rate and longer tenor. In addition, the assigned rating reflects our opinion on the Company’s adequate working capital buoyed by short term financing surpluses over the last three years, satisfactory equity cushion, stable and experienced management team and strong parental support from Helios Investment Partners – a private equity firm with over $3.6 billion funds under management. However, the rating is tempered by supplier risk owing to reliance on gas supply from Escravos-Lagos pipeline which is prone to vandalism, as well as the negative impact of COVID-19 pandemic on Axxela’s customer’s operations due to the slow restart of business activities.
Axxela Limited is a leading player in the natural gas processing, marketing and distribution value chain in Nigeria, providing gas to top-tier industrial consumers in Lagos, Port Harcourt and Sagamu-Benin axis and also exports natural gas to the Togolese National Electric Power Company through the West African gas pipeline network. The Company has developed over 300 kilometres (km) of gas pipeline infrastructure and delivers about 70 million meters of standard cubic feet per day (mmscf/d) to over 180 industrial and commercial customers in Nigeria.
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