Chairman of Lafarge Cement WAPCO, Chief Olusegun Osunkeye
Lafarge Cement WAPCO Nigeria Plc is likely to hit the capital market with N45 billion bond issue to refinance its medium-term loan in the third quarter(Q3) of 2011, THISDAY checks have revealed.
Lafarge Cement WAPCO had obtained N45.27 billion syndicated multi-currency medium-term loan in 2008 to finance its expansion project called Lakatabu at Ewekoro, Ogun State.
The repayment of the facility is expected to commence in the last quarter of 2011. But in order to mitigate its impact on the profitability of the company, a bond issuance is being planned to refinance the loan facility.
Chairman of Lafarge Cement WAPCO, Chief Olusegun Osunkeye had during the 52nd Annual General Meeting held recently in Lagos confirmed the bond issue to shareholders, saying that the details were being finalised.
Sources close to the company told THISDAY last Monday that from every indication, the bond would be issued in Q3 of 2011.
“We are in the process and while much details cannot be given out now due to regulatory requirements, I can tell you that by Q3, Lafarge Cement WAPCO will float the bond,” the source said.
The source added that Book Building process would be used for the bond, adding that investors are very enthusiastic about the bond given the prospects of the value addition potential of the Lakatabu project, which would commence production very soon.
It is expected that the funds to be raised via the bond would lessen the pressure to repay the loan and interest charges on the company.
An official of the company said while the proceeds of the bond would be used immediately to repay the term-loan, repayment of the bond later would be facilitated by the expected improved cash flow of the company as a result of the Lakatabu project.
Osunkeye had said the 2.2 million metric tonnes would bring the company’s total cement production capacity to 4.4 million metric tonnes per annum.
“The completion of the Lakatabu project will take company’s total cement production capacity to 4.4 million metric tonnes per annum. The project represents a significant milestone for the company and will help to further secure the future of the company and of its potential to continue to create value for the shareholders and all stakeholders,” he said.
Shareholders of the Lafarge Cement WAPCO had at the AGM approved the proposal of the company to go into power business after Osunkeye had explained that the decision was informed by the need for the company to provide for their own power use and sell or export any excess to the Power Holding Company of Nigeria (if they are interested) or neighbouring countries, which in turn will yield profit for the organisation.
The directors of the company sought the permission of the shareholders to engage in the business of power generation, distribution, trading, energy or power rentals, as well as the managers of electric power works.
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