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24 June 2019

Lafarge Africa Plc has announced the sale of its South African
subsidiary with consideration being all of its outstanding inter-group debts
amounting to $316.289 million to Caricement B.V, a subsidiary of LafargeHolcim.

The firm said that LafargeHolcim agreed to purchase the shares for the
consideration being a set-off of all the outstanding amounts due by the company
to Caricement under the Inter-Group Loan Agreements at the closing date, which
is July 31, 2019.

In the explanatory note to the Nigerian Stock Exchange (NSE), Lafarge
listed benefits of the transaction, which is its only existing foreign currency
loan, to include an enhancement of the value of its shareholders’ investments
in the company, which is of utmost importance to the Board.

The deal, it continued, will free it of any foreign currency debt
obligation, while protecting and preserving its net income and cash flows
considering the resulting decrease sums to be applied towards debt service as
on the overall the Company’s debt will be reduced by about N115 billion and an
additional approximately N47 billion by the eventual deconsolidation of Lafarge
South Africa Holdings.

Following the conclusion of the transaction, the company stressed that
the only debt on its books will be the second tranche of the Corporate Bond
(N33.8 billion) with maturity in June 2021, and the CBN Power Intervention
funds through Bank of Industry (N19.9 billion).

The improvement in cash flow and net income, resulting from the
reduction in debt service outflows, it continued, will enable Lafarge Africa to
consider additional investments in cement production capacity to improve its
market share in Nigeria.

Lafarge said that the sale is equally expected to boost the company’s
profitability, through positive cash flow generation. According to the
company’s audited results for the year ended December 31, 2018, loss after tax
dropped to N8.801 billion from N34.801 billion in 2017, translating to a loss
per share of N105 as against the previous N637.

Group operating profit for the year stood at N24.885 billion, despite
the N38.602 billion from the Nigerian operations, which was impaired by the
N13.717 billion loss by South Africa.

This was an improvement from the N7.885 billion recorded in 2017 with
South Africa’s N22.27 billion loss dragging down Nigeria’s N30.155 billion

The group explained that “The sale of the South African operating unit is expected to further enable Lafarge Africa to reinvest and expand operations in existing plants; just as its management can now devote attention to operations with higher profitability and prospects.”https://leadership.ng/2019/06/23/lafarge-to-sell-safrica-operation-for-316m/

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