Lafarge Cement bond issue increases dividend prospects, Nigeria

Lafarge Cement bond issue increases dividend prospects, Nigeria
Published: 13 June 2011

Analysts at Meristem Securities Limited, an investment banking firm, have said that the proposed NGN45bn (US$290m) bond issue by Lafarge Cement WAPCO Nigeria Plc to refinance its medium-term loan (MTL), will enhance the dividend payment ability of the cement firm.

A NGN45.27bn multi-currency syndicated MTL comprising US$114.5m and NGN27.9bn with tenor of 45 months and 60 months respectively was obtained by the company in 2008 to finance its expansion project called Lakatabu.

Due to a moratorium period of 30 and 45 months respectively that exist on the two facilities, the repayment schedule of the loan will commence from the last quarter of 2011. But to mitigate its impact on the profitability of the company, a bond issuance is being planned to refinance the loan facility.

THISDAY had recently reported that the bond would be issued in the third-quarter of 2011. “We are in the process and while details cannot be given out now due to regulatory requirements, I can tell you that by 3Q Lafarge Cement WAPCO float the bond,” a source had said, adding that Book Building process would be used for the bond.

The source noted that investors were very enthusiastic about the bond given the prospects of the value addition potential of the Lakatabu project, which would commence production very soon.