Management of the Lafarge Africa Cement plc through its Chairman has placed a request of Rights Issue value at N140billion before shareholders during the company’s 58th Annual General Meeting (AGM) held on Wednesday in Lagos.
The N140billion of Rights Issue request was approved by the shareholders which according to Mobolaji Balogun, the Chairman of Lafarge Africa plc said the rights issue that is being presented today to shareholders for your approval represents an important step in resolving our foreign currency exposure and its impact on our earnings. You may be aware that the company has not raised equity since 2006, he added.
The Chairman further stated that, in addition to reducing our debt, the Rights issue to raise up to N140billion provides all of our shareholders the opportunity to increase their investment in the company.
“The recapitalization is positive and our largest shareholders, Lafarge Holcim have committed to subscribing to their rights in full through a conversion of existing shareholder loans.”
It reduces our foreign currency exposure by approximately half, improves our cash flow and positions the company for our future capacity expansion plans, Balogun stressed.
He pointed out that if our entire foreign currency were to be resolved through the Rights Issue, its size will be inordinately large such that subscription levels by minorities may be low.
“We therefore decided that approximately 50percent of our foreign currency debt will be repaid and to minimize further transaction losses, we hedged $300million, with Non-Deliverable Futures contracts entered into with the Central Bank of Nigeria.