Lafarge Africa N132 Billion Rights Issue Opens

Goddy Egene

The Rights Issue of 3,097,653,023 ordinary shares by Lafarge Africa Plc to existing shareholders opened last Friday and will close on December 15, 2017. The offer is being made at N42.50 per share.

Lafarge Africa Plc had, at the beginning of the month, applied to the Nigerian Stock Exchange (NSE) to raise N132 billion fresh capital from existing investors through the Rights Issue.

Shareholders of the cement manufacturing firm had in June approved the proposal by the company to raise about N140 billion.

However, the company is raising raise about N132 billion through the issuance of 3,097,653,023 ordinary shares of 50 kobo each at N42.50 per share on the basis of five new ordinary share for every nine ordinary share s held as at November 1, 2017.

Shareholders of the company had given the approval for the rights issue with a charge to the directors that the company would remain listed on the NSE.

The Chairman of Lafarge Africa, Mr. Bolaji Balogun, had said that the rights issue, which is the first since 2005, represents an important step in resolving the company’s foreign currency exposure and impact on its earnings.

According to him, apart from reducing debt of the company, the right issue provides all shareholders opportunity to increase their investment in the company.

“The recapitalisation is positive and our largest shareholder, LafargeHolcim has committed to subscribing to their rights in full through a conversion of existing shareholder loans. This investment is a strong indication of the groups’ continued belief in the Nigerian story. It is the largest right issue and the largest investment in a listed company by an investor. It reduces our foreign currency exposure by approximately half, improves our cash flow and positions the company for our future capacity expansion plans,” he said.

Responding to request by the shareholders that the company should not be delisted after the right issue, Balogun said if the LafargeHolcim was considering that option, it would not commit to make such huge investment in the company.

Speaking on the company’s turn-around plan launched in the third quarter of 2016, the chairman said it has started yielding results.

“The plan revolves around achieving high reliability across our production facilities, increasing the use of alternative fuel(biomass) and locally sourced coal as a way to mitigate disruption of production by gas supply shortages and the impact of devaluation on cost of gas. We have increased local sourcing of critical materials to lower foreign exchange component of our operational costs. Finally, we are working on a new route to market initiative and improvements in logistics with increased vehicle turn-around and size of fleet of third party providers,” Balogun said.