Eterna Plc, a major player in Nigeria’s energy sector, has announced plans to raise N10 billion through a rights issue involving the offer of 978,108,485 new ordinary shares priced at N22.00 per share.

The rights issue is structured on the basis of three new shares for every four shares held by shareholders whose names appeared on the company’s register as of the close of business on November 27, 2025.

The offer officially opened on January 12, 2026, and is scheduled to close on February 18, 2026.

At the qualification date, Eterna’s shares were priced at N35.50 per share, while the current market price stands at N32.00. The rights issue price of N22.00 represents a discount of N13.50, or 38 percent, to the qualification date price. The post-rights reference price is estimated at N29.71 per share.

The discounted pricing of the offer provides existing shareholders with an opportunity to increase their equity holdings at a valuation significantly below the market price as at the qualification date.

Proceeds from the N10 billion rights issue are expected to be deployed across key areas of the company’s operations and financial structure.

A sum of N4.5 billion is earmarked for debt reduction, with the aim of lowering the company’s interest-bearing liabilities and improving its overall financial leverage.

Another N3 billion is expected to be channelled into operational working capital to enhance liquidity and ensure smoother management of day-to-day business activities.

The company has also allocated N2 billion for capital expenditure to support growth initiatives and expansion projects across its operations.

An additional N500 million will be used to cover the costs associated with the rights issue.

Eterna Plc is listed on the Nigerian Exchange and operates across several segments of the energy value chain.

The company is engaged in the manufacturing and distribution of lubricants and chemicals, crude oil trading, and the operation of an expanding network of filling stations across the country.

It has also outlined plans to expand its footprint into the midstream and upstream segments of the energy sector.

Eterna operates a world-class lubricants blending plant supported by a state-of-the-art laboratory, producing both Castrol and Eterna-branded products for the Nigerian market and the wider West African region.

In addition, the company has continued to expand its fuels and marketing infrastructure, including a 34-million-litre coastal tank farm in Lagos, an aviation fuel depot located near the Nnamdi Azikiwe International Airport in Abuja, and a growing nationwide network of filling stations.

The N10 billion rights issue comes at a critical time for Eterna Plc, providing an opportunity to restructure its balance sheet, particularly in response to elevated debt levels and liquidity constraints.

As of September 2025, the company’s debt-to-equity ratio stood at approximately seven times, underscoring the significant impact of finance costs on earnings performance.

A portion of the funds raised is expected to be applied directly to debt repayment, which should ease interest expenses and enhance the quality of earnings over time.

Although the immediate effect may not result in a sharp increase in profitability, the reduction in balance sheet risk is expected to support more sustainable earnings in the future.

Following the rights issue, the enlarged share base is expected to result in near-term dilution of earnings per share.

However, management projections indicate that the effect of dilution could be partly offset by lower finance costs and improved operating efficiency.

For context, full-year 2025 profit is forecast at about N1 billion, translating to an estimated earnings per share of 77 kobo. Projected first-quarter 2026 earnings of N485 million imply an earnings per share of approximately 21 kobo, even after taking the additional shares into account.

For existing shareholders, the rights issue presents an opportunity to increase exposure to the company at a significantly lower cost while also reducing the average acquisition price of their holdings.

The planned use of most of the proceeds for debt reduction and working capital improvement is expected to lower Eterna’s financial risk profile. With borrowings remaining high, reducing debt levels should help cut interest costs and stabilise earnings.

While the rights issue does result in earnings per share dilution, the impact is considered measurable and not destructive. Profits will be distributed over a larger number of shares, which on its own reduces earnings per share, but management’s earnings outlook suggests that the dilution will be largely absorbed by improved performance.

For shareholders with a medium-term investment horizon, participating in the rights issue offers protection against dilution while providing the opportunity to acquire additional shares at a substantial discount.