Lafarge Africa Plc has concluded plans to issue N25 billion in commercial papers from a N60 billion programme this month.The company made this known when it released its financial results for the third quarter and nine-month period ended September 30, 2017.
Commercial paper is an unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories and meeting short-term liabilities.
The company explained that the net proceeds of the commercial papers would support short-term working capital needs, after which it will be listed on the FMDQ OTC Exchange. In addition, the already approved N131.65 rights issue will hold in November at N42.50 per share.
For the nine-month period, the firm’s operating EBITDA stood at N44.4 billion while sales increased by 39 per cent within the same period.
The Chief Executive Officer of the company, Michel Puchercos said: “As part of our strategy to reduce foreign currency debt exposure, and improve financial flexibility, the shareholders and board of Lafarge Africa consented to the issuance of N131.65 billion by way of rights issue at 42.50 per share.
“Five new shares will be issued for every nine shares held at the qualification date, which will be announced in the coming weeks. The Rights Issue is expected to open and close in November 2017.”
According to him, the company has continued to record significant improvement since the implementation of a turnaround initiative in September 2016 amid harsh operating environment.
“As of September 2017, the cement demand in Nigeria was significantly lower than prior year. Nevertheless, operating EBITDA for our Nigeria operations was up 4.0x at N41.7 billion and EBITDA margin stood at 30 per cent thanks to stable pricing environment, steady industrial operations, fuel flexibility, execution of our commercial and logistics performance improvement plan.
“We shipped the first batch of cement to the Ghana market, which was well accepted. The South African economy exited a recession in second quarter 2017, supported by secondary and tertiary sectors. Cement revenue was up 30 per cent supported by stable pricing and the strengthening of the Rand against the Naira. However, operations were impacted in the quarter by industrial challenges at the Lichtenburg plant.
“Overall cement demand in Nigeria is expected to close the year lower than the prior year, on account of the economic slowdown in the first half 2017. In South Africa, the environment gradually recovers from a recession but the challenges of cement overcapacity persist. In this context, Aggregate & Concrete operations will support business performance,’ he added.