Less than one per cent of applicants bought about 98.4 per cent of the N89.2 billion rights issue by Lafarge Africa Plc, in a major skew expected to consolidate the shareholding of the majority core investor in the Nigerian cement group.
Allotment results approved by the Securities and Exchange Commission (SEC) and filed at the Nigerian Stock Exchange (NSE) by Lafarge Africa showed that the rights issue was fully subscribed, raising N89.212 billion in new equity funds for the cement group.
Lafarge Africa had offered 7.43 billion ordinary shares of 50 kobo each at N12 per share. The rights were pre-allotted on the basis of six new ordinary shares for every seven ordinary shares held as at the close of business on December 4, 2018. Acceptance list for the N89.2 billion rights issue opened on December 17, 2018 and closed on January 28, 2018.
A breakdown of the allotment results showed that 16 applicants out of a total of 1,826 applicants bought 7.313 billion ordinary shares of 50 kobo each, representing 98.37 per cent of the total shares on offer. The remaining 1,810 applicants were allotted 121 million shares, representing 1.63 per cent of the total shares on offer.
The allotment results showed that 1,734 shareholders accepted their rights in full totaling 5.93 billion ordinary shares, out of which 738.73 million ordinary shares were traded on the floor of the NSE. The report also showed that out of 1,734 shareholders who took up their rights in full, 734 shareholders also applied for additional 1.300 billion ordinary shares and were allotted in full from the renounced rights.
A total of 92 shareholders with a provisional allotment of 395.875 million ordinary shares partially accepted their rights for 202.40 million ordinary shares, thus the balance of 193.47 million ordinary shares were renounced. Also, 34 subscribers purchased rights of 738.73 million ordinary shares on the floor of the NSE.
The N89.2 billion rights issue was Lafarge Africa’s second issue in 14 months. Lafarge Africa had sold its November 2017’s rights issue of about 3.1 billion ordinary shares of 50 kobo each at N42.50 per share. The N89.2 billion rights issue was also structured like the November 2017 rights issue, including a convertible deal that allowed the majority core investor- LafargeHolcim, to convert its debts to equities.
Market analysts had expressed fears that with the debt-to-equities conversion and investors’ apathy at the primary market, the percentage shareholding of the majority core investor-LafargeHolcim, might increase after the latest rights issue.
The November 2017’s rights issue had increased LafargeHolcim’s majority shareholding to 76.32 per cent. Lafarge Africa needs to maintain a minimum of 20 per cent of its shareholdings in the hands of minority shareholders to sustain its listing on the Nigerian Stock Exchange (NSE). With 76.32 per cent majority equity stake, LafargeHolcim already has the much-needed three-quarters percentage shareholdings necessary for major corporate changes.
LafargeHolcim had taken advantage of the November 2017’s rights issue to increase its majority equity stake by 4.97 percentage points from pre-rights issue position of 71.35 per cent to 76.32 per cent after the rights issue.
LafargeHolcim had picked up its rights fully and further subscribed to the un-allotted shares, thus raising its percentage shareholding. It subscribed fully to its rights under a debt-for-equities deal that saw conversion of LafargeHolcim’s dollar-based loan to equities.
Lafarge Africa Plc Chairman, Mr Mobolaji Balogun, has said the additional capital raised from the latest rights would further help to deleverage the company’s balance sheet and provide head room for the expansion of its business.
He said the company foresees a stable pricing environment and favourable economic conditions in its Nigeria market while its South Africa operations are undergoing a turnaround plan.
Chief Executive Officer, Lafarge Africa Plc, Mr. Michel Puchercos said the company’s refinancing plan is aimed at preparing for future development in Nigeria by improving the company’s leverage as well as strengthening its profitability.
Key extracts of the interim report and accounts of Lafarge Africa for the nine-month period ended September 30, 2018 had shown that sales rose from N223.67 billion in third quarter 2017 to N234.30 billion in third quarter 2018. With cost of sales rising from N165.76 billion to N178.21 billion, the cement company, however, ended with a pre-tax loss of N14.36 billion in 2018 as against pre-tax profit of N1.09 billion in comparable period of 2017.
After tax gain of N4.04 billion, net loss after tax stood at N10.37 billion in third quarter 2018 compared with net profit after tax of N937.91 million in comparable period of 2017. With these, loss per share for the nine-month period stood at N1.20 in 2018 as against positive earnings per share of 10 kobo in corresponding period of 2017