The management of Lafarge Africa Plc has announced adjustment in the closure of its ongoing right issue, according to the released document, it obtained the approval of the Securities and Exchange Commission to change the closure date of its Rights Issue of Seven Billion, Four Hundred and Thirty Four Million, Three Hundred and Sixty Seven Thousand, Two Hundred and Fifty Six (7,434,367,256) ordinary shares of Fifty Kobo (N0.50) each at Twelve Naira (N12.00) per share, which was proposed to be allotted on the basis of six (6) new ordinary shares for every seven (7) ordinary shares held as at 4 December 2018.
The Rights Issue will now close on Monday, 28 January 2019 as against Saturday, 26 January 2019 earlier announced. Backing up the adjustment was the fact that the previous closure date was not a business day.
Our Observation and Opinion
The right price (N12.00) represents a c.10.45% discount on Lafarge Africa’s traded closing price as at Monday, 3rd December 2018 (N13.40). Please note that the share price of Lafarge Africa Plc (Wapco) have ranged between N11.95 where it closed on the 17th December, 2018 when the right opened and N12.80 achieved on the 18th January, 2019. In other words, those taking advantage of their right are doing so at N0.80 premium against the current market price (22nd January, 2019).
Please understand that at full subscription of the said proposed right, the shares outstanding of the company will move from 8,673,428,240 to 16,107,795,496.
Lafarge Africa in its last financial statistics for the nine months ended 30th September, 2018 reported a Non Current Loans and Borrowings to the tune of N177.406 billion split into Power Funds, Bonds, Promisory notes and Commercial Papers amongst few other classifications. Noteworthy, in the report is also the N10.373 billion Loss after tax reported for the period after taking care of N34.928 billion Finance Cost and other costs.
We are of the opinion that the success of the ongoing right issue will improve the company working capital, reduce finance cost and consequently positively impact its profit in the medium term. We therefore rated Lafarge Africa a Hold. Safe Trade.
Jeariogbe Tunde Segun