Investors are beginning to react to Ellah Lakes Plc’s plans to raise N250 billion to acquire strategic assets and clean up its balance sheet in a disclosure to shareholders that’s seen the agricultural firm’s stock surge more than 9 percent barely four days after.
The company called an Extraordinary General Meeting (EGM) scheduled for July 25 to seek approval for equity issuance via public offer, private placement, or other mechanisms and to convert director or related-party loans into ordinary shares.
The plan also involves increasing share capital to accommodate new equity and debt conversion.
In the third quarter ending April 30, 2025, Ellah Lakes reported revenue of N68.7 million, a sharp improvement from N416,000 a year earlier, though it still posted an operating loss of N238.1 million due to escalating administrative and personnel expenses.
Despite the losses, investor sentiment turned bullish after the EGM announcement. The stock’s 122 percent performance year-to-date, with share price quoted at N7.64, highlights market confidence in the turnaround strategy.
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Analysts say the proposed asset acquisition, including the conversion of loans to equity, could materially strengthen the balance sheet and unlock future growth.
The 2019 acquisition of a 2,400-hectare oil palm plantation in Edo State marked Ellah Lakes’ pivot into strategic agribusiness expansion. The company now plans to leverage the N250bn raise to consolidate land assets, improve its agricultural infrastructure, and accelerate production.
BusinessDay reported last December that the firm is targeting to start palm oil production in the first half of 2025. The company also eyes palm kernel oil production in the future as it looks to consolidate its revenue base.
Central to the board’s strategy is the conversion of existing liabilities, including director and shareholder loans, into equity, reducing financial pressure.
At the last AGM in December 2024, shareholders approved converting N658 million owed under the Central Bank of Nigeria’s Oil Palm Plantation Development Programme, along with other debts. This year’s measure extends the debt-to-equity plan to further clear the books.
Read also: Ellah Lakes eyes palm oil production in 2025
Ellah Lakes also aims to raise capital through public or private channels. The flexibility is designed to balance immediate capital needs with broader investor participation.
The company’s long-term turnaround plan includes full integration of ELP Sunshine Ltd, of which it now owns 80 percent. The Ondo State Government, which holds the remaining 20 percent, is reportedly negotiating a conversion of its equity into a long-term land lease for 5,000 hectares in a move that could strengthen the company’s land asset base without immediate cash cost.
Still, the company faces execution challenges. While biological assets and property, plant and equipment remain strong, historically low cash reserves down to N15.9 million from N243 million at the start of the fiscal year, underscore liquidity constraints.
Investor optimism rests on a successful EGM and effective deployment of capital toward scaling production and reducing debt. If managed well, the capital raise could catapult Ellah Lakes into a leading position among listed Nigerian agricultural firms.
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