Lafarge Africa aims to cut debt with first equity sale in decade

30th November 2017

By: Reuters

  

Font size: - +

Lafarge Africa will use part of the proceeds of a 131.65-billion naira ($415-million) rights issue to cut debt by around $270-million, almost halving its foreign currency exposure, the cement maker said in its offer document.

The local unit of Franco-Swiss group Lafarge Holcim is offering five new shares for every nine held at 42.50 naira, a 12.4% discount to its closing price of 48.50 naira on Wednesday.

The rights issue is the first injection of new equity in the company in more than a decade, the offer document said.

The parent firm owns a 71.4% stake in the Nigerian unit and is backing the cash call. Lafarge Holcim aims to convert 92.96-billion naira of debt in the Nigerian entity into shares as part of the sale.

Lafarge Africa inherited $507-million in shareholder loans and $88-million of third-party foreign currency debt when it acquired Nigeria's third-largest cement manufacturer United Cement Company of Nigeria (UNICEM) in 2015, the offer document said.

This debt exposed the company to a significant foreign currency loss after Nigeria's naira lost more than a third of its official value since the central bank floated the currency last year.

"The proposed rights issue of up to 131.65-billion naira ... will resolve the equivalent of (about) $270-million of the debt effectively, almost halving the foreign currency exposure," Lafarge Africa said.

The cement maker announced a pre-tax loss of 22.82-billion naira last year, weighed down by foreign currency debt amid weak sales in an economy which has just emerged from a recession.

Since the naira was floated, the central bank has created multiple rates to mask pressure on the naira, which has stabilised across various markets.

Several multinational firms have turned to the local market to raise funds, reducing reliance on offshore parent company dollar funding, which caused most of them to post losses after the currency weakened.

Guinness Nigeria, which posted its first loss in 30 years last year, has sold shares in the local market and Unilever raised 58.85-billion naira in October.

Shares in Lafarge Africa, which have gained 29% this year, fell 2% on Wednesday, giving it a market value of 270.4-billion naira ($884-million).

The acceptance list for the rights issue opened on Nov. 24 and closes on Dec. 15. The new shares are scheduled to begin trading on Jan. 24.

Edited by Reuters

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION