Lafarge Africa Plc Tuesday announced to the Nigerian Stock Exchange (NSE) and the investing public that it would raise N89 billion via a rights issue pegged at N12 per share.
The board of directors held an emergency board meeting Monday, December 3, 2018 where it was agreed that the issue would be executed by offering six shares for every seven shares held by existing shareholders.
The cement producing company said the terms of the rights issue now approved by directors, were earlier passed by shareholders at an extraordinary general meeting held on the 25th September 2018 and that the qualification date will soon be announced.
The approved price of N12 represents a 10.45 percent discount on Lafarge Africa’s traded closing price of N13.40 as at Monday, December 3, 2018 when the decision was taken. The price, however, trails its year-open price of N44.19 by 70 percent.
The rights issue according to Mobolaji Balogun, the board’s chairman will help to further deleverage the company’s balance sheet and provide headroom for the expansion of the business.
Michel Puchercos, Lafarge’s chief executive also said the refinancing plan is aimed at preparing for future development in Nigeria, improving the company’s leverage as well as strengthen its profitability.
The statements by Balogun and Pucheros were made at the company’s September 25, 2018 EGM, 10 months after it opened a rights issue to raise N131.65 billion by way of 3,097,653,023 ordinary shares of 50 Kobo each at N42.50 per share on the basis of five new ordinary shares for every nine ordinary shares held as at November 1, 2017.
At the conclusion of the 2017 offer, the rights issue were 100 percent subscribed and in March 2018 the allotments were finalized.
Financials of the company for the first half of 2018 however showed that loss after tax of the company increased to N3.9 billion as against a profit of N19.7 billion recorded in June 2017. Finance costs were N23.7 billion as against N11.5 billion in 2017.
Analysts however believe that the impact of the approved rights issue on both earnings and balance sheet will be positive from 2019.
“Both the substitution of expensive short-term debts with equity and the restructuring of USD loans (from USD308 million to USD293 million, maturity extended to 7.5 years, and with 2-year moratorium on both interest and principal effective September 2018) should moderate finance cost, said Christian Orajekwe lead analyst at Cordros Capital in October.
“That said we believe the outstanding USD debt is underlined by FX risk in a possibly volatile 2019 environment.”
CBN’s PMI fall continues despite 2.5bps rise to 49.4 points in October
Crude oil price rises amid U.S gulf shutdowns, troubling outlook
Access Bank, WEMA, FCMB offer to help rebuild in aftermath of #EndSARS destructions
Stanbic IBTC’s Q3’20 revenue surges 19.1% to N66.2bn
Lagos reopens all markets fully for the first time since COVID-19
Nigeria: PMI, oil, naira in focus
CACOVID calls for end to palliatives looting across Nigeria
NigeriaSugar importation rises despite government’s self-sufficiency goal
Airtel Africa unfolds gains amid Covid-19 as H1’20 revenues up 10.7% to $1.82bn
Former MTN Nigeria CTO, Toriola, appointed CEO designate
Frontpage February 26, 2018