Chinenye Anuforo and Chinwendu Obienyi
Lafarge Africa Plc has disclosed that it is still awaiting regulatory and shareholders’ approval to conclude the proposed sale of its South African subsidiary.
The company said it has signed an agreement with Caricement B.V. an affiliate of the LafargeHolcim Group, to divest its entire 100 percent shareholding in Lafarge South Africa Holdings (Pty) Ltd, for a consideration of US$317million, adding that conclusion of the proposed sale is expected in Q3 2019, subject to customary and regulatory approvals as well as that of shareholders’.
Lafarge explained that the proposed sale is expected to enhance the value of shareholders’ investments in Lafarge Africa. “The proceeds of the proposed sale (US$317m) will be used to completely extinguish Lafarge Africa’s shareholder loan of US$293 million as at July 31, 2019, and related interest due. This full repayment of the shareholder loan will protect and preserve Lafarge Africa’s net Income and cash flows.
Lafarge said that the sale is equally expected to boost its profitability, through positive cash flow generation.
According to the company’s audited results for the year ended December 31, 2018, loss after tax dropped to N8.801 billion from N34.801 billion in 2017, translating to a loss per share of N105billion as against the previous N637billion.
Group operating profit for the year stood at N24.885 billion, despite the N38.602 billion from Nigerian operations, which was impaired by the N13.717 billion loss by South Africa arm.
This was an improvement from the N7.885 billion recorded in 2017 with South Africa’s N22.27 billion loss dragging down Nigeria’s N30.155 billion profit.
Commenting on the results, Michel Puchercos, CEO of Lafarge Africa said: “Our Strategy 2022 ‘Building for Growth’ in Nigeria is delivering the expected results with strong increase in operating EBITDA and profit. Our momentum is very positive and is expected to be sustained in 2019.
South Africa continued the turnaround plan with significant improvement in Q1 2019 compared to prior year.
Our strategic decision to divest South Africa with a sale to another affiliate of the LafargeHolcim Group, will strengthen our balance sheet.”
Continuing he said, “The Rights Issue together with the divestment of our South African Operations will deleverage Lafarge Africa by c.N246billion, enabling to fully repay shareholder loan and short-term naira overdraft.
“This will support Lafarge Africa’s ambition to accelerate the execution of its Strategy 2022 and to fully focus on the development of the Nigerian market.”