…Lafarge Africa set to sell 100% equity holding in South Africa subsidiary***
For the third day running, activities on the nation’s bourse continued on a negative trend on Wednesday, with the All Share IndexAll Share Indexdropping further by 0.15 per cent.
Specifically, the index which opened trading at 29,818.80 shed 46.08 points or 0.15 per cent or N20 billion, to close at 29,772.72 due to price losses by some blue chips, thereby bringing down the market capitalisation to close at 13.120 trillion, against N13.140 trillion on Tuesday.
Meanwhile, Forte Oil was the most active in the activity chart, having accounted for 970.17 million shares worth N64.38 billion in an off-market trade.
According to TRW Stockbrokers Limited, these deals were negotiated between Stanbic IBTC Stockbrokers as buyer, while APT Securities and Funds Limited, WSTC Securities and Quantum Zenith Securities were sellers.
Prestige Assurance came second with 53.86 million shares worth N26.93 million, while eTranzact International traded 42.05 million shares valued at N100.08 million.
Guaranty Trust Bank traded 34.01 million shares valued at N1.05 billion, while FBN Holdings transacted 31.54 million shares worth N220.23 million.
Consequently, investors bought and sold 1.23 billion shares valued at N67.89 billion traded in 3,441 deals.
This was in contrast with a turnover of 2.91 billion shares worth N11.23 billion exchanged in 3,324 deals on Tuesday.
The downturn was impacted by losses recorded in medium and large capitalised stocks, amongst which are; Nestle Nigeria, Seplat, Presco, Conoil and MTN Nigeria.
Analysts at Cordros Capital stated that “In the absence of a positive catalyst, we guide investors to trade cautiously in the short term.
However, stable macro-economic fundamentals and compelling valuation remain supportive of recovery in the mid-to-long term.”
The market breadth closed positive, with 21 gainers versus 19 losers, with the Forte Oil recording the highest price gain of 10 per cent, to close at N34.65, per share.
NEM Insurance followed with a gain 9.87 per cent to close at N2.45, while Thomas Wyatt Nigeria appreciated by 9.68 per cent to close at 34k per share.
Dangote Sugar Refinery went up by 9.09 per cent to close at N12, while Ecobank Transnational Inc (ETI) appreciated by 7.84 per cent to close at N11 per share.
Conversely, Consolidated Hallmark Insurance, Presco and Prestige Assurance led the losers’ chart by 9.09 per cent each, to close at 20k, N50 and 50k per share, respectively.
AXA Mansard Insurance followed with a decline of 6.28 per cent to close at N1.79, while Conoil went down by 5.87 to close at N21.65 per share.
In the meantime, the Lafarge Africa Plc on Wednesday announced the proposed sale of 100 per cent equity in Lafarge South Africa Holdings Limited (LSAH).
Consequently, the company notified its shareholders of the proposed related party transactions with Caricement B.V, a subsidiary of Lafargeholcim limited, pursuant to the Nigerian Stock Exchange (NSE) rules governing transactions with related parties or interested persons.
It said that an explanatory note had been prepared to provide all the material information to all shareholders of Lafarge Africa, in respect of the proposed sale of a 100 per cent equity interest held by the company in LSAH.
The company in a report on three proposed related third transaction posted on the exchange web site said that its equity in LSAH would be sold to Caricement B.V, an indirect subsidiary of LafargeHolcim Limited.
“Lafarge Africa will present the terms of the transaction to the shareholders for consideration at the 60th Annual General Meeting in July, as special business, which will be voted on by way of an ordinary resolution in accordance with CAMA.
“LSAH, a member of the LafargeHolcim Group, was established in 1998 and manufactures and supplies cement, aggregates, ready-mix concrete and fly ash in South Africa.
“LSAH became a wholly owned subsidiary of Lafarge Africa following the company’s acquisition of a 100 per cent stake in LSAH in 2014”, the company said.
It noted that the consideration that Lafarge Africa paid for the acquisition of LSAH was settled by way of cash of 200 million dollars and the allotment of 724,758,803 ordinary shares in Lafarge Africa; to Financiere Lafarge SAS1.
“Lafarge Africa’s ownership of 100 per cent of LSAH, represents an indirect average holding of 72.40 per cent in the underlying principal operating companies in South Africa, including Lafarge Industries South Africa, Lafarge Mining South Africa and Ash Resources,” it added.
According to the company, LSAH’s operations have been subjected to shrinking demand in South Africa and an aggressively competitive market.
“Between 2000 and 2007, demand was fueled by increasing infrastructure spend which tapered off and eventually declined quite sharply.
“Low growth indicators, growing budget deficits, declining infrastructure spend and reduced consumer discretionary income continue to constrain industry volumes; and characterise the downward trend in South Africa’s building materials sector.
“The competitive environment, slow recovery and struggle to defend market share have heightened market pressure to reduce prices, significantly impacting LSAH‟s operating margins in recent years,” the company said.
Meanwhile, Lafarge Africa also announced the redemption of its matured N26.4 billion, 14.25 per cent, three year bond due on June 15, 2019.
The company registered a N100 billion bond issued programme in June 2016 out of which the sum of N60 billion was issued in series one and two of the programme.
According to the company, the matured series 1 bond was issued on June 10, 2016 with a three year tenor and at a fixed coupon of 14.25 per cent.
The company leveraging on its performance, recently concluded rights issue as well as management strategic plan.
To systematically deleverage the company has redeemed the series 1 bond from internally generated cashflow.
The firm said outstanding balance of N33.6 billion represents series 2 of the N100 billion issuance programme at a fixed coupon rate of 14.75 per cent, a five year tenor to mature in June 2021.