Shareholders of Lafarge Africa Plc yesterday authorised the board of directors of the cement company to raise new equity capital up to N140 billion in a major move to deleverage the cement group.
Lafarge Africa plans to raise the new equity fund through a rights issue, implying that only existing and qualified shareholders will participate in the new issue. The shares will be pre-allotted to shareholders on the basis of their shareholdings as at a predetermined date.
LafargeHolcim, which holds the majority equity stake of 72.59%, 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.
With the approval by shareholders, the rights issue is expected to be launched in late September and finalised by the fourth quarter.
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.
He noted that the decision of LafargeHolcim to convert existing loans into equity demonstrates the core investor’s continued belief in the Nigeria story, pointing out that the rights issue is the largest so far in the Nigerian capital market and the largest investment in a listed company by an investor.
Balogun said the company has been positioned for better performance in the years ahead as benefits of the turnaround plan launched in the third quarter of 2016 were already counting in the fourth quarter of 2016.
Group MD, Lafarge Africa Plc, Michel Puchercos, said the acquisition of Unicem in 2016 was in line with the group’s capacity expansion plans.
He noted that doubling of the production capacity of the Mfamosing plant in Calabar to 5.0 mmtpa has contributed significantly to Lafarge Africa’s capacity and footprint in Nigeria.
He added that the group plans to increase the use of alternative fuel or biomass and locally mined coal to lessen high energy cost and production disruptions due to gas supply shortages.