Shareholders kick as Lafarge Africa moves to raise N131bn, mulls merger

Lafarge Africa Plc has announced plans to raise N131.65 billion from existing shareholders through a rights issue.

At the end of an extraordinary meeting by directors of the cement giant, the board of directors agreed on the total size of the rights issue, the offer price and the basis of allotment. However, the company has not decided on the qualification date.

Many Nigerian shareholders of the company have however kicked against a plan by LafargeHolcim, which holds the majority equity stake of 72.59 per cent in Lafarge Africa, to subscribe to its rights, through a debt-for-equities deal.

According to the regulatory filing after the meeting, Lafarge Africa will sell new ordinary shares to existing shareholders on the basis of five new ordinary shares for every nine ordinary shares at a price of N42.50 per share.

The board stated that it has commenced regulatory approval process for the rights issue.

Also, Lafarge Africa would be undertaking a business combination with two of its wholly owned subsidiaries-United Cement Company and Atlas Cement Company Limited.

The board of directors of Lafarge Africa has already approved the merger and business combination between Lafarge Africa and the two other companies. The board of directors authorised Lafarge Africa to enter into negotiations necessary for the consummation of the merger.

The directors had also passed a resolution authorising Lafarge Africa to seek the approval of the Securities and Exchange Commission (SEC) and other relevant regulators for the consummation of the merger.

LafargeHolcim, which holds the majority equity stake of 72.59 per cent in Lafarge Africa Plc, has indicated it will subscribe fully to its rights. LafargeHolcim will pick up its rights under a debt-for-equities deal that will see conversion of LafargeHolcim’s dollar-based loan to equities.

Many Nigerian shareholders had raised objections to the debt-for-equities deal, which they said could give the majority core investor undue advantage to increase its controlling equity stake in the company.

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