Lafarge Africa Plc projects returns to profitability with right issue

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8 years ago

Lafarge Africa Plc has projected that the company is set to recoup its losses experienced couple of years back, largely resulting from foreign exchange.

The management team led by the Group Managing Director, Michel Puchercos, disclosed this to stockbrokers and financial journalists at the company’s fact behind right issue of N131.65bn at the floor of Nigerian Stock Exchange in Lagos.

The company assured market operators of its commitments towards sustainable growth that will deliver returns to all stakeholders.

In a letter to Issuing Houses, Chairman of Lafarge Africa Plc, Mr Mobolaji Balogun, had explained the Right Issue became imperative as the company, by acquisition of a 100 per cent stake in Egyptian Cement Holdings, inherited the $507 million shareholders loans, as well as $88 million of third party foreign currency debt used for the expansion of the cement plant in Mfamosing, Calabar.

He added that the debt had exposed the company to a significant foreign currency translation loss following the 40 per cent devaluation of the Naira.

Responding to questions at the event, the Chief Financial Officer of the company, Bruno Bayet said the proceed of the right issue would be used for the refinancing a portion of the company’s foreign currency denominated shareholders loans, by way of debt to equity conversion and finance working capital requirement and expands operations.

He explained that most investments in the company have been through internally generated revenue or debt from the majority shareholder. Pointing out that the proceeds of the rights will resolve equivalent of $270 million of the debt effectively almost halving the foreign exchange exposure.

The right issue is probably one of the largest ever right issue transactions undertaken by a multinational in our domestic market and represents a huge opportunity for resolving the exposure of the company to foreign exchange risk. And provides shareholders the opportunity to increase their investment in the company.