The shareholders of Lafarge Africa Plc have collectively approved the proposed sale of Lafarge South Africa Holding Limited (LSAH) to LafargeHolcim Group for the sum of $316.2 million.
The approval was reportedly announced at the company’s Annual General Meeting (AGM) which happened in Lagos on Monday. Speaking on the approval of the proposed sale of its South African subsidiary, the company’s Chairman, Mr Mobolaji Balogun, disclosed that LSAH sale would be beneficiary to all shareholders.
The details: According to Balogun, the sale would ultimately enhance the shareholders’ value in Lafarge Africa Plc. He stressed that this is of utmost importance for the company’s board.
The Chairman went further to state that the transaction, alongside the company’s transformation which had been undergoing processes for 3years, would ensure that the company does not have any foreign currency debt.
“The process of transformation of this company, which we undertook some three years ago, is now moving very swiftly toward solid foundation. Over the last three years, we have succeeded in reducing the company’s debts by over 1.1 billion dollars through the support of shareholders.”
Shareholder Investment: While further reacting to the approved deal, the company’s Chairman disclosed the following conclusion to sell off its subsidiary, shareholders’ loan of $293 million will be completely paid off.
“Following the conclusion of the proposed sale, Lafarge Africa’s shareholder’s loan of 293 million dollars as at July 31, the only existing foreign currency loan in the books of the company, will be completely paid off.
“Over and above that, because the entity in South Africa also have some substantial debt, when that sale is completed on July 31, it will also lead to the deconsolidation of around 115 million dollars debt related to Lafarge South Africa.”
Debt Reduction: Speaking on one of the reasons for the sale, the Chairman revealed that the impact of the deal will bring about a reduction in Larfarge’s debt of about $470 million. It was also revealed that the reduction in the company’s debt is pertinent to the prospect for dividend distribution.
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“So, the total impact of the transaction on our debt is a reduction of something in the region of 470 million dollars. “With the sale of LSAH, as proposed by the board to shareholders, the only debt that will remain on the books of the company will be the second tranche of the corporate bond due for redemption in June 2021.
“It will also include the subsidised loan in respect of the Central Bank of Nigeria (CBN) Power Intervention Funds through the Bank of Industry (BoI). This significant reduction in debt holds prospects for dividend distribution”
On the company’s free float deficit on the nation’s bourse, Balogun expressed the company’s commitment to comply with all requirements. He acknowledged that the company is on the premium board of the Nigerian Stock Exchange (NSE) and there are two rules to the free float compliance.
The Outlook: Speaking on the sale, Managing Director Lafarge Africa, Mr. Michel Puchercos, assured that the management is determined to deliver on the trust expressed by the shareholders.
“We are delighted with the understanding by our shareholders on the need to focus on our business in Nigeria. The approval of the proposed sale of Lafarge South Africa by the shareholders will cut debts service obligation and curtail substantially financial charges which will have a positive impact on liquidity and the opportunity to expand our operations in Nigeria.”
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