By Dipo Olowookere
The raising of addition funds through issuing of N131.65 billion rights issue by the board of Lafarge Africa has been described as the best thing to do at the moment.
Lafarge Africa is raising N131.65 billion through a rights issue of 3.098 billion shares of 50 kobo each to existing shareholders at a price of N42.50 per share.
The rights issue opened on November 24, 2017 and will close on December 15, 2017. It was pre-allotted on a basis of five new shares for every nine shares held as at close of business on November 1, 2017.
At an interactive session at the Nigerian Stock Exchange (NSE) last week, Chief Executive Officer (CEO) of Lafarge Africa Plc, Mr Michel Puchercos, disclosed that the rights issue was in the best interest of Lafarge Africa and its shareholders.
According to him, despite the challenging economic and regulatory operating environment, the company has continued to make significant progress on a number of fronts, ensuring solid operating performance.
He added that the results of the company’s transformation were already evident as seen in the first quarter 2017 unaudited results which showed a robust revenue growth of 55 percent, evidencing a clear demonstration of the company’s commitment to sustained operational excellence.
Also speaking on the matter, Chairman of Lafarge Africa Plc, Mr Mobolaji Balogun, explained that the net proceeds of the N131.65 billion rights issue would be used to refinance a portion of the company’s foreign currency denominated shareholder loans by way of a debt-to-equity conversion, finance working capital requirement and expand operation.
He therefore, urged shareholders to fully participate in it in order to support the realisation of its strategic growth objectives.
Mr Balogun further appealed to shareholders to take up their rights to demonstrate their commitment to the achievement of the company’s strategic growth objectives.
According to him, Lafarge Africa through a series of transaction completed a 100 percent indirect acquisition of United Cement (Unicem) through its acquisition of a 100 percent stake in Egyptian Cement Holdings and by the acquisition Lafarge Africa inherited $507 million shareholder loans, along with $88 million of third party foreign currency debt, which were utilised for the 2.5 million metric tonnes capacity expansion of the cement plant in Calabar.
He noted that while the capacity expansion, which was completed in record time and to budget, brought the plant’s capacity to five million metric tonnes, the debt has exposed Lafarge Africa to a significant foreign currency translation loss following the 40 percent devaluation in the Naira.
The Chairman pointed out that short term remedial action was taken by the board of LafargeHolcim in third quarter 2016 to shield the company from further devaluation.
