Lafarge Africa Plc says there is a proposal at hand to sell its 100% equity in Lafarge South Africa Holdings Limited (LSAH).
In an explanatory note sent to the Nigerian Stock Exchange on Wednesday, the company said the transaction will be with Caricement B.V, an indirect subsidiary of Lafarge Holcim 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,” it said.
“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.”
The South African subsidiary was acquired from Financiere Lafarge SAS in 2014 for $200 million.
“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 continues 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 has also redeemed its matured N26.4 billion, 14.25 per cent, three-year bond due on June 15, 2019.
It 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%.