Shareholders of Lafarge Africa Plc on Monday unanimously approved the proposed sale of Lafarge South Africa Holding Limited (LSAH) to LafargeHolcim Group for 316.2 million dollars.
They gave the approval at the company’s 60th Annual General Meeting (AGM) in Lagos.
Speaking at the meeting, Mr Mobolaji Balogun, the company’s Chairman, said that LSAH sale would be beneficiary to all shareholders.
Balogun said that the sale would enhance the shareholders’ value in Lafarge Africa, which according to him is of utmost importance to the board.
“Following conclusion of the proposed sale, Lafarge Africa’s shareholders 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,” he said.
Balogun said the transaction would ensure that the company did not have any foreign currency debt.
“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.
“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,” Balogun said.
He assured shareholders that the board and management would continue to drive improvements in results.
The chairman, who commended the shareholders for their support, said that the company has not yet to be in a position to pay dividend.
“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 your support and through the support of our largest shareholder.
“We have also succeeded now, essentially in focussing the business of the Nigerian market where the opportunities and prospects are very evident and clear to each and everyone of us,” Balogun said.
He said that the management had continued to work on bringing down the cost to enhance performance.
According to him, the results of all these issues will be seen in the company’s half year result.
He said that shareholders would further be encouraged when they see results of third quarter at the end of September.
On the company’s free float deficit on the nation’s bourse, Balogun expressed Lafarge Africa’s commitment to comply with the requirement.
He said that the company was on the premium board of the Nigerian Stock Exchange (NSE) and there were two rules to the free float compliance.
Balogun said that companies on premium board were expected to comply by free float of 20 per cent or by the value of free float worth N40 billion.
He said the company was very confident that when the market gets the result of its half year performance and subsequent quarters that the free float would be beyond N40 billion level.
Also, Mr Michel Puchercos, Managing Director Lafarge Africa, appreciated the understanding showed by the shareholders in approving the board’s proposals.
Puchercos said that the management was 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 positive impact on liquidity and the opportunity to expand our operations in Nigeria,” Puchercos said.
Also, Mr Patrick Ajudua, a shareholder, commended the company for the disposal of South Africa subsidiary.
Ajudua said that investment in South Africa had not been good for most Nigerian companies.
He called on Lafarge Africa to reconsider its investment in Ghana, noting that the investment had not been favourable.