Lafarge Africa PLC has explained that the N131.65 billion it would raise from the ongoing rights issue would be used to deleverage the company, support working capital and expand operations.
The rights issue which opened November 24, 2017 would close December 15, 2017 and is open to shareholders whose name appeared on the register of members on the qualification date for the rights issue, which was November 1, 2017.
The company explained that rights renounced by shareholders will be available to existing shareholders who have taken up their rights and have requested for more adding that those who renounce their rights also have the opportunity to trade the rights on the floor of the NSE.
Speaking to capital market community during ‘The Facts Behind the Offer’ at the Nigerian Stock Exchange head quarters in Lagos, Lafarge Chief Financial Officer (CFO), Mr. Bruno Bayet, explained that the proceeds of the rights issue would help to strengthen the company’s balance sheet and financing structure.
Earlier, commenting on the rights issue, the first since 2005, Bolaji Balogun, chairman of Lafarge Africa, said the exercise would help the company reduce its “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,” he assured shareholders at the last annual general meeting in June.
He noted that the decision 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.”
Balogun said the company has been positioned for better performance in the years ahead as benefits of the turnaround plan launched in the third quarter of 2016 were already counting in the fourth quarter of 2016.
Lafarge Africa ended the third quarter with a marginal recovery in profitability as significant increase in net interest expense constrained the bottom-line.
Despite about 39 per cent growth in sales, Lafarge Africa ended the third quarter with a pre-tax profit of N1.08 billion.
Key extracts of the interim report and accounts of Lafarge Africa Plc for the period ended September 30, 2017 showed that sales rose by 38.9 percent to N223.67 billion in 2017 as against N161.04 billion recorded in comparable period of 2016. Gross profit also surged from N18.11 billion in 2016 to N57.31 billion in 2017. The cement manufacturer pooled operating income of N18.40 billion in 2017 compared with operating loss of N32.97 billion in comparable period of 2016.
However, net finance expense jumped from N7.4 billion to N17.31 billion. Profit before tax thus depressed to N1.08 billion, albeit a considerable recovery when compared with pre-tax loss of N40.37 billion in 2016. After taxes, net profit stood at N937.91 million by September 2017 compared with net loss of N37.4 billion in 2017. Earnings per share was modest at 10 kobo in 2017 compared with net loss per share of N8.27 in corresponding period of 2016.