A significant participant in Nigeria's energy industry, Eterna Plc, has declared its intention to raise N10 billion through a rights issue that will offer 978,108,485 new ordinary shares at a price of N22.00 each.

For every four shares held by shareholders whose names were listed on the company's registry as of the close of business on November 27, 2025, three new shares will be issued as part of the rights issue.

The deal is set to expire on February 18, 2026, with an official opening date of January 12, 2026.

The current market price of Eterna's shares is N32.00, compared to N35.50 on the qualification date. The qualification date price was reduced by N13.50, or 38%, to the rights issue price of N22.00. The expected post-rights reference price per share is N29.71.

Existing shareholders have the chance to expand their equity ownership at a valuation far lower than the market price as of the qualification date thanks to the offer's discounted pricing.

The company's operations and financial structure are anticipated to benefit from the N10 billion rights offering.

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.

Eterna's financial risk profile is anticipated to be reduced by the intended use of the majority of the proceeds for debt reduction and working capital enhancement. Reducing debt levels should assist lower interest costs and stable earnings while borrowing levels remain high.

Although the rights issue dilutes earnings per share, the effect is thought to be quantifiable and not detrimental. Although the distribution of profits over a greater number of shares may lower earnings per share on its own, management's earnings estimate indicates that the dilution will be mostly offset by better performance.

Participating in the rights offering gives investors with a medium-term investment horizon protection from dilution and the chance to buy more shares at a significant discount.