Lafarge Africa Plc has revealed three strategic reasons behind its quest for N140 billion rights issue proposed by the company’s directors, saying it would position the firm for future expansion exercise, assist in reducing debt profile, and further deepen cash flow.
Chairman of the company, Bolaji Balogun, who gave the details to shareholders’ during a recent investors forum held in Lagos noted that apart from collapsing debt profile, the rights issue will help in resolving its foreign currency exposure and push up company’s earnings faster.
According to him, “You may be aware that the company has not raised equity since 2005, with all our investments financed with internally generated funds, and debt provided by the majority shareholder, other lenders and bondholders”.
“In addition to reducing our debt, the rights issue to raise up to N140 billion provides all our shareholders the opportunity to increase their investment in the company in the company. The recapitalisation exercise is positive.”
He buttressed his presentation with revelation that the largest shareholder, Lafarge Holcim, has expressed commitment to subscribe fully to the rights through a conversion of existing shareholders loans.
Balogun averred that “The investment is a strong indication of the group’s continued belief in the Nigerian story. It is the largest rights issue and the largest investment in a listed company by an investor. It reduces our foreign currency exposure by approximately half and improves our cash flow”.
“We therefore decided that approximately 50 per cent of our foreign currency debt will be repaid and to maximise further translation losses, we hedged $300million, with non deliverables futures contracts entered into with the Central Bank of Nigeria (CBN).
Business Hilights recalls that Lafarge Holcim remains the world largest cement solutions conglomerate with presence in every continent of the globe.
