Goddy Egene

Shareholders of Lafarge Plc yesterday at the annual general meeting (AGM) in Lagos approved plans by the company to issue a N100 billion bond later in 2018.

The proceeds of the bond would be used to refinance the company’s debts and it is coming after the company raised N131.6 billion through Rights Issue last year.

Chairman of the Lafarge Africa Plc, Mr. Mobolaji Balogun said the company had a debt of $600 billion in 2016.

“In order to address the impact on the business, $300 million was hedged via non-deliverable forward FX contracts provided by the Central Bank of Nigeria,” he said.

He said hence, the company raised N131.6 billion from a rights issue, which was subscribed by 100 percent to finance part of the debts.

Balogun said the N100 billion will be used to refinance already existing debts.

“The proposal this year is to refinance some of that debt. We cannot continue to sit on a large concentration of dollar-denominated debts and therefore, we need to refinance.”

Meanwhile, he has explained that the dividend of N13 billion recommended by the board for 2017 financial was in appreciation of the support shown by the shareholders so far and a worthy return on their investments.

“The board of directors is mindful of the support of all our shareholders through the difficult but necessary journey to transform the company into a more agile and correctly financed business ready to benefit from the potential opportunities in Nigerian building materials (market).”

He also assured shareholders that restructuring of the capital structure of the company largely completed through the past year would help to significantly reduce the cost of financing and currency translation risk.

According to him, the company is implementing a new route-to-market initiative aimed at supporting the anticipated growth in demand as the country gradually recovers from recession and as foreign exchange rates stabilise.

Also speaking at the AGM, the Country Chief Executive Officer, Lafarge Africa Plc, Michel Puchercos expressed optimism about the performance of the company in the current year.

“Improvement plans in Nigeria delivered strong operational performance while turnaround actions will be consolidated further in 2018 through energy optimisation as well as commercial and logistic improvement,” Puchercos said.

The Lafarge Africa CEO is optimistic that favourable pricing in Nigeria coupled with gains from logistic and commercial initiatives would sustain market share.

“The target is to significantly build Earnings before interest tax, depreciation and amortisation (EBITDA) margins. The South Africa economy is expected to grow in 2018 which should impact on our South Africa operations. Our turnaround plan in South Africa which is focused on cost containment, commercial transformation and industrial stabilisation is expected to return our SA business to profitability,” he added.