Lafarge Africa Plans $249 Million Share Sale to Trim Debt

(Bloomberg) -- Lafarge Africa Plc plans to raise as much as 90 billion naira ($249 million) through a share sale in Nigeria, with the continent’s second-biggest cement producer using the funds to lower its debt levels.

The sale will take place by the fourth quarter, Chief Financial Officer Bruno Bayet said by phone Tuesday after the company reported a loss. The move by the Lagos-listed unit of Switzerland-based LafargeHolcim Ltd. would be on top of a rights issue of about 130 billion naira late last year.

“Profit is affected by leverage, so it needs to be brought down,” he said.

The company’s total debt dropped to about $600 million in 2017 from more than $1 billion. It expects its leverage ratio, which measures the level of debt incurred against its assets, to drop to between 60 percent and 70 percent “over the next 18 months,” from more than 100 percent, Chairman Mobolaji Balogun said in May.

Lafarge Africa’s loss for the six months through June 30 narrowed to 3.9 billion naira from 19.7 billion naira in the previous year, it said in a Nigerian Stock Exchange filing. Revenue increased 4 percent to 162.3 billion naira.

The stock retreated 10 percent, the most since June 2013, to 29.25 naira, the lowest since April 2010, by 11:38 a.m. in Lagos, making it the worst performer on the 164-member Nigerian Stock Exchange All Share Index.

Nigeria’s economic recovery may boost second-half sales while “increased” deployment of “alternative fuel and coal” to power its plants will improve margins, Bayet said. It aims to turn around its South African operations by cutting costs and embarking on a sales drive, he said.

To contact the reporter on this story: Emele Onu in Lagos at eonu1@bloomberg.net

To contact the editors responsible for this story: Alastair Reed at areed12@bloomberg.net, Ana Monteiro, Michael Gunn

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