Rating Release

Agusto & Co. hereby assigns a “Bbb-” rating to Tempo Paper Pulp and Packaging Plc.

The rating expires on 30 June 2024.

Agusto & Co. hereby assigns a “Bbb-” rating to Tempo Paper Pulp and Packaging Plc (“TPPP” or “the Company”). The assigned rating reflects the Company’s adequate capacity to meet its maturing obligations, supported by its ability to grow earnings despite prevailing macroeconomic headwinds, and its cash-generating capacity strengthened by favourable trade terms with both customers and suppliers. The rating also considers TPPP’s dominant position in Nigeria’s flexible plastic packaging market, its foreign exchange (forex) earning potential given the in-roads it has made within the ECOWAS market, its ability to pass-on incremental costs to its customers, and the critical role of flexible packaging within the current macro-economic landscape. The rating is however constrained by the Company’s high leverage position exacerbated by substantial dollar and euro-denominated loans, persistent funding mis-match in the Company’s working capital management and the absence of a proper corporate governance framework.

TPPP is a wholly owned subsidiary of Obasanjo Holdings Limited. The Company was originally set up to manufacture and distribute corrugated boxes. However, since 2021, its primary revenue source has been the production and sale of cast polypropylene (CPP) and biaxially oriented polypropylene (BOPP) films used in printing, laminating and packaging for various industries. The Company has a combined annual production capacity of 89,000 metric tonnes (MT) of both CPP and BOPP films, and 15,000 MT capacity for metallized films, making it a dominant player in the country. TPPP transitioned to a public company limited by shares in 2022. However, the Company is not listed on any stock exchange.