The board of directors of Lafarge Africa Plc yesterday announced that the cement company would be raising N131.65 billion through a rights issue.
After the end of its extraordinary meeting, directors of Lafarge Africa stated that they have decided that the company will float a rights issue of five new ordinary shares for every nine ordinary shares at a price of N42.50 per share.
The qualification date for the rights issue has not been decided. However, the company has commenced regulatory approval process for the new issue.
Also, Lafarge Africa would be undertaking a business combination with two of its wholly owned subsidiaries-United Cement Company and Atlas Cement Company Limited.
The board of directors of Lafarge Africa has already approved the merger and business combination between Lafarge Africa and the two other companies.
The directors had also passed a resolution authorising Lafarge Africa to seek the approval of the Securities and Exchange Commission (SEC) and other relevant regulators for the consummation of the merger.
LafargeHolcim, which holds the majority equity stake of 72.59% in Lafarge Africa Plc, has indicated it will subscribe fully to its rights. LafargeHolcim will pick up its rights under a debt-for-equities deal that will see conversion of LafargeHolcim’s dollar-based loan to equities.
Many Nigerian shareholders had raised objections to the debt-for-equities deal, which they said could give the majority core investor undue advantage to increase its controlling equity stake in the company.
Chairman, Lafarge Africa Plc, Mobolaji Balogun, said the recapitalisation would help to reduce the group’s exposure to adverse foreign currency translation losses as experienced in 2016 following a 40% depreciation of the Naira against the Dollar.
Balogun said the rights issue will help to reduce the group’s foreign currency exposure by 50% while the remaining portion of the debt, with the support from LafargeHolcim, has been refinanced and hedged for 12 months.