Lafarge Cement WAPCO Nigeria
plc, which yesterday got shareholders’ approval to consolidate its Nigeria and
South Africa businesses, is considering raising additional equity through a
public offer.
Analysts say if market
conditions permit, the move will guarantee market liquidity of the stock as
well as encourage participation by other investors.
Shareholders of Lafarge
Cement WAPCO yesterday approved the creation of Lafarge Africa, a
Nigerian-listed holding company that will consolidate all Lafarge’s Nigerian
and South African assets.
Consequent to the issuance
of new shares by Lafarge Cement WAPCO as a result of the transaction approved
by shareholders and the public offer, the company will be
seeking to list the
newly-issued shares on the Nigerian Stock Exchange (NSE).
In view of the transaction
and in order to accommodate the new shares in the company that were proposed to
be issued through the public offer, the company got shareholders’ approval to
increase its authorised share capital from N2.286 billion to N5 billion by
creating additional 5,426,133,328 ordinary shares of 50 kobo each, ranking the
same in all respects with the existing ordinary shares of the company.
All of the resolutions
relating to the transaction were passed by a significant majority of the
eligible shareholders. Approvals ranged between 78 percent and 98 percent,
notwithstanding that Lafarge Group abstained from voting on the special
resolutions. This takes the company a step closer in its bid to create a
leading sub-Saharan Africa building materials platform.
Following this approval,
Lafarge Group will transfer its shares in its businesses in Nigeria (AshakaCem,
Unicem and Atlas) and South Africa to Lafarge WAPCO for a cash consideration of
$200 million and the issuance of 1.4 billion Lafarge Africa shares to the
Lafarge Group.
Speaking at Lafarge WAPCO’s
55th Annual General Meeting, Olusegun Osunkeye, board chairman, said he was
extremely pleased with the outcome of the vote.
“The overwhelming majority
of our minority shareholders were strongly supportive, which reflects that they
see the strong value opportunity in the creation of Lafarge Africa. Lafarge
Africa is not only a value-enhancing transaction for shareholders but it will
provide significant value to all stakeholders through the creation of a
Nigerian-listed sub-Saharan Africa building materials giant that will be better
able to support the development needs of our continent,” said Osunkeye.
Lafarge Africa plc could be
the 6th largest NSE-listed company, with an anticipated initial market
capitalisation above $3 billion. The newly-created entity will have a combined
production capacity of around 12 million metric tonnes (MT) comprising Lafarge
WAPCO (4.5 million MT), Lafarge South Africa Holdings (3.6 million MT), United
Cement Company of Nigeria (2.5 million MT), Ashaka Cement (1 million MT) and
Atlas Cement Company, an import operation with bagging capacity of 0.5 million
MT.
There are already projects
underway to expand on this capacity, and by 2017 Lafarge Africa plc will have
installed cement capacity of 17 million MT. The inclusion of South Africa also
provides operations in aggregates and fly ash.
“The creation of Lafarge
Africa allows the company to continue in its drive to be the best in the areas
in which it operates,” said Guillaume Roux, who will be the MD/CEO of Lafarge
Africa plc.
“The broader geographic
coverage means that Lafarge Africa will be better positioned to serve its
customers more widely. It also places the company in a stronger position to be
able to benefit from the economic growth and development opportunities available
in both Nigeria and South Africa,” said Roux.
Following the outcome of the
AGM, Lafarge Africa will require regulatory approval from the Securities and
Exchange Commission (SEC) before the transaction is finalised. This is
anticipated to take place during the third quarter of 2014. Once approved and
in line with Nigerian regulation, a Mandatory Tender Offer will be open to
minority shareholders of AshakaCem to give them the opportunity to swap their
AshakaCem shares for Lafarge Africa shares.
At the meeting, shareholders
approved a dividend of 330 kobo per share. This reflects a significant 340
percent increase on the 75 kobo approved in 2011 and 175 percent on the 120
kobo approved in 2012.
Looking back at these
financial statements, Lafarge WAPCO reported revenue growth of 12 percent
between 2012 and 2013 to N98.8 billion. The company linked this top-line growth
largely to the continued focus on exceptional operational performance and the
stable supply of natural gas which allowed a total of 3.4 million MT (18
percent higher than 2012) of cement to be dispatched during the year. The new
Ready-Mix Concrete business contributed N1.6 billion to the total reported
N98.8 billion turnover.
The company said it has not
only focused on increasing its turnover but has ensured that its operational
costs are curtailed without compromising on service to its customers.
On the back of a strong
turnover and cost containment, Lafarge WAPCO’s profit-after-tax increased by a
remarkable 92 percent to N28.3 billion. It also noted that its strong
operational performance supported by efficient working capital management
resulted in an increase in cash holdings of N11.5 billion.
BusinessDay
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