By Michael Eboh

Ashaka Cement Plc said that its energy strategy helped grow its earnings by 30 per cent, in spite of environment and operational challenges.

In a statement after its Extraordinary General Meeting in Abuja, Chairman of the company, Mrs. Edith Onwuchekwa, stated that in addition to its turnaround plans, the company had utilized 82 per cent of coal over the period.

According to her, despite lower cement demand and gas shortages, the company’s turnaround plan and energy strategy delivered Earnings Before Interest, Tax, Depreciation And Amortisation, EBITDA, margins of 30 per cent.

She said, “The erection of a 16 megawatts (MW) coal-fired captive power plant at Ashaka is nearing completion and will significantly ensure the stability of electric power to the plant and the optimization of our energy costs at the plant.”

In another development, shareholders of the company approved the complete acquisition of the company by Lafarge Africa, in a deal with a cash consideration of N604.092 million and total value of N5.97 billion.

The shareholders of Ashaka Cement agreed to allow Lafarge increase its stake in the company from 86.51 per cent to 99.99 per cent. The deal, Ashaka Cement said, is however, subject to approval by the regulatory authorities. Onwuchekwa also said that in the scheme of arrangement, shareholders of the company would receive 57 Lafarge shares for every 202 Ashaka shares, in addition to a cash consideration of N2 for each of the shares.

She said the scheme represents a total value of N19.78 per Ashaka Cement share, a 26 per cent premium to the N15.74 consideration stipulated by the Nigerian Stock Exchange, NSE, and a 16 per cent premium to the last traded share price of Ashaka Cement of N17.08.

The deal was predicated at a price of N63 per Lafarge Africa share, as at August 11, 2017.

She said the decision to undertake the ‘Scheme of Arrangement’ for the reorganisation of its capital was to address issues of illiquidity of its shares and due to the dislocations in the country’s financial sector which has helped in no small measure in stifling equity capital raising programme.

According to her, the Scheme became necessary following the delisting of the company in July 2017, which curtailed the ability of its shareholders to liquidate their shareholding.

She further stated that the scheme was also in view of the seeming difficulties that Ashaka Cement envisaged it would encounter in raising, through an equity transaction, additional capital required over the next two to three years to meet its expansion plans and maintain its competitive advantage in the cement manufacturing industry.

Onwuchekwa dexplained that Ashaka Cement intends to re-invest and utilize any cash generated from existing assets to partly fund its expansion plans, warning though, that this would restrict its ability to pay dividends to shareholders in the short to medium term.

She said, “There, the Board of Directors has, after careful consideration of the company’s current corporate structure, the expansion plans and the funding requirements for the company’s business; formed the view that a Scheme of Arrangement reorganising the shareholding structure of the company is in the best interest of both the company and its shareholders.”

In addition, the acting chairman said the share consideration involving giving the shareholders Lafarge Share, offers Ashaka Cement shareholders a continuing opportunity for capital appreciation through the issuance of future bonus shares and dividends. She also declared that with Lafarge shares, shareholders would be offered the opportunity of revenue diversification by geography, given Lafarge Africa’s operations in Nigeria, South Africa and Ghana; as well as revenue diversification by plant location.

“The implementation of the Scheme will ease the speed and the cost at which Ashaka Cement can attract capital to fund its expansion plans,” Onwuchekwa noted.


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