LafargeHolcim, the parent company of Lafarge Africa Plc, said in a statement today that it has completely divested its stakes in Holcim Indonesia.
According to the statement which was published on the company’s website earlier today, the shares were sold to Semen Indonesia for a price valued at a whooping $1.75 billion.
Prior to the divestment, the Zurich-based company held majority (80.6%) stakes in Holcim Indonesia for many years.
A company in bed with debts?
Meanwhile, the decision by LafargeHolcim to dispose of its entire shareholding in the now former Indonesian unit, became imperative as part of the company’s ongoing effort to offload its debts.
“lafargeholcim has closed the divestment of holcim indonesia with the disposal of its entire shareholding of 80.6 percent in holcim indonesia to semen indonesia for an enterprise value of usd 1.75 billion, on a 100 percent basis.
the proceeds from this transaction significantly improve the net debt to recurring ebitda ratio by 0.2 with the target of 2 times or less to be achieved by the end of 2019.”
A closer look at the company’s equally indebted, Nigerian subsidiary
Lafarge Africa Plc, which was incorporated on February 24th 1959, is majority owned by Lafarge Holcim. This makes Lafarge Africa a subsidiary of the company.
Meanwhile, no thanks to stiff competition posed by the likes of Dangote Cement and BUA Cement, the company has recently struggled to maintain profitability. Take for instance, Lafarge Africa Plc ran at a N7 billion loss in full-year 2017 compared to a N19.8 billion profit after tax in full-year 2016.
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Similarly, its recently released third quarter result for the period ended September 30th 2018, shows that it also ran at a loss of N6.4 billion. What this means, therefore, is that Lafarge Africa could most likely declare yet another loss for 2018.
In September 2018, Analysts at Cordros Capital Limited attributed the company’s declining profits to its 2014 merging with LafargeHolcim’s South African operation.
But the company has been making efforts
Meanwhile, against all odds Lafarge Africa Plc has been making consistent efforts to overcome its challenges. Take for instance, the company has recently offered a number of right issues. In early 2018, it raised N132 billion through a rights issue, money that the company said would partly be used to offset its debts.
The company, once again, commenced yet another round of rights issue in December, seeking to raise the sum of N89.2 billion. The rights issue was closed earlier this week. And it is expected that money realised will be used to position the company for growth.