Leading cement manufacturer, Lafarge Africa Plc, is set to sell off its South African subsidiary after shareholders collectively approved the proposed sale. With this development, the company will be selling 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 60th Annual General Meeting (AGM) in Lagos on Monday. Speaking on the matter, the company’s Chairman, Mobolaji Balogun, explained that LSAH sale would be beneficiary to all shareholders.
According to Balogun, the sale would ultimately enhance shareholders’ value in Lafarge Africa, a primal goal for the board, as well as ensure that the company does not have any foreign currency debt. This is in tandem with the company’s transformation which had been undergoing processes for three years.
“The process of transformation of this company, which we undertook some three years ago, is now moving very swiftly toward solid foundation,” the Chairman said, adding that over the period, the company has succeeded in reducing debts by over 1.1 billion dollars through the support of shareholders.
After the sale has been concluded, Lafarge Africa’s shareholders’ loan of $293 million – the only existing foreign currency loan in the books of the company – will be completely paid off. This would bring about a reduction in Larfarge’s debt of around $470 million.
“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,” Lafarge Africa’s Managing Director, Michel Puchercos said while commending the company’s shareholders.
Moreover, significantly reducing the debt burden is pertinent to the prospect for dividend distribution. 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.
The outstanding debt will “also include the subsidized loan in respect of the Central Bank of Nigeria (CBN) Power Intervention Funds through the Bank of Industry (BoI),” Balogun noted.
Lafarge Africa Plc is a cement manufacturer headquartered in Lagos and quoted on the Nigerian Stock Exchange (NSE). The company is majorly controlled by LafargeHolcim, a Swiss multinational company that manufactures building materials with a presence in around 80 countries, and around 80,000 employees.