Lafarge Africa Plc, plans to source about N132 billion in a new capital raising aimed at reducing the indebtedness of the cement group and free more capital for long-term growth.
LafargeHolcim, a cement group, holds the majority equity stake of 72.59% in Lafarge Africa.
Lafarge Africa is seeking to raise N131.65 billion through a rights issue of about 3.1 billion ordinary shares of 50 kobo each at N42.50 per share. The new shares will be pre-allotted to shareholders on the basis of five new ordinary shares for every nine ordinary shares held as at the close of business on Wednesday November 1, 2017.
The board of directors of Lafarge Africa, together with their professional advisers, have already filed for approval of the new offer by capital market regulators. The Nigerian Stock Exchange (NSE) has confirmed receipt of an application for a new capital raising from Lafarge Africa.
If approved, the supplementary offer may set records as the largest rights issue so far in Nigeria and the largest single investment by an existing core investor in a quoted company.
Lafarge Africa is thus expected to provide about N96 billion in the recapitaliSation drive. Already, LafargeHolcim has indicated it would fully partake in the rights issue. However, the multinational core investor’s plan to pick up its rights under a contentious debt-for-equities deal that will see conversion of LafargeHolcim’s dollar-based loan to equities has been a subject of concern to the minority.
Chairman, Lafarge Africa Plc, Mobolaji Balogun, recently said the recapitalisation would help to reduce Lafarge Africa’s exposure to foreign currency translation losses by 50%.
Third quarter report of Lafarge Africa for the period ended September 30, 2017 had shown that net interest expense more than doubled from N7.4 billion in 2016 to N17.31 billion in 2017. This pressured the group’s bottom-line despite a 39% growth in sales.