The shareholders of Lafarge Africa Plc have approved a N140bn rights issue by the building solutions provider to its existing shareholders during its Annual General Meeting held in Lagos on Wednesday.
The rights issue process is expected to be launched after the approval of the transaction.
Speaking at the AGM, the Chairman, Board of Directors, Lafarge Africa, Mr. Mobolaji Balogun, said subscription to the rights issue would take place by the beginning of Q3 2017, and is expected to be finalised by October at the latest.
LafargeHolcim, the company’s largest shareholder, is expected subscribe to its rights by converting the existing debt into equity.
Commenting on the rights issue, the first since 2005, Balogun noted that the decision of LafargeHolcim to convert existing loans into equity “demonstrates the group’s continued belief in the Nigeria story,” adding that, “This is the largest rights issue and the largest investment in a listed company by an investor.”
The company said it was embarking on the rights issue to reduce its exposure to adverse foreign currency translation losses as experienced in 2016 following a 40 per cent depreciation of the naira against the United States dollar.
While listing the benefits of the recapitalisation exercise, the Lafarge chairman said, “It reduces our foreign currency exposure by 50 per cent. The remaining portion of the debt, with the support from LafargeHolcim, has been refinanced and hedged for 12 months.”
Also commenting on the development, the Country Chief Executive Officer, Lafarge Africa, Michel Puchercos, said that the acquisition of Unicem in 2016 was in line with the company’s capacity expansion plans.
Puchercos noted that the doubling of the production capacity of the Mfamosing plant in Calabar to five million metric tonnes per annum had “contributed significantly to Lafarge Africa’s capacity and footprint in Nigeria; provides an opportunity to increase our share of the cement market in the south east and south regions, and has begun to impact positively on the financial results of the company.”