- Lafarge Africa, Mutual Benefits Seek N133.6b From Shareholders
Lafarge Africa Plc and Mutual Benefits Plc have launched bids to raise more than N133.6 billion through rights issue of new ordinary shares.
The two companies yesterday separately filed application with the Nigerian Stock Exchange (NSE), seeking to raise new equity funds from existing shareholders.
Lafarge Africa plans to raise N131.65 billion through a rights issue of about 3.1 billion ordinary shares of 50 kobo each at N42.50 per share. The new shares will be pre-allotted to shareholders on the basis of five new ordinary shares for every nine ordinary shares held as at the close of business yesterday.
Mutual Benefits is seeking to raise N2 billion through a rights issue of 4.0 billion ordinary shares of 50 kobo each at nominal value of 50 kobo per share. The rights will be pre-allotted on the basis of one new ordinary share for every two ordinary shares held as at the close of business yesterday.
LafargeHolcim, which holds the majority equity stake of 72.59 per cent in Lafarge Africa, has already indicated it will subscribe fully to its rights. LafargeHolcim had proposed to pick up its rights under a debt-for-equities deal that will see conversion of LafargeHolcim’s dollar-based loan to equities.
Many Nigerian shareholders had raised objections to the debt-for-equities deal, which they said could give the majority core investor undue advantage to increase its controlling equity stake in the company.
Chairman, Lafarge Africa Plc, Mr. Mobolaji Balogun, said the recapitalisation would help to reduce the group’s exposure to adverse foreign currency translation losses as experienced in 2016 following a 40 per cent depreciation of the Naira against the Dollar.
He noted that the decision of LafargeHolcim to convert existing loans into equity demonstrates the core investor’s continued belief in the Nigeria story, pointing out that the rights issue is the largest so far in the Nigerian capital market and the largest investment in a listed company by an investor.
According to him, the rights issue will help to reduce the group’s foreign currency exposure by 50 per cent while the remaining portion of the debt, with the support from LafargeHolcim, has been refinanced and hedged for 12 months.
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.