The board of directors of Cement Company of Northern Nigeria (CCNN) has secured the mandate of shareholders to raise about N1.6 billion fresh equity fund to finance the company\'s business development programme.
At an extra-ordinary general meeting held in Sokoto yesterday, the shareholders unanimously authorised the directors to issue new ordinary shares of 50 kobo each to existing shareholders, thus stepping up the plans of the company to access the capital market.
Competent sources said the board of the company has already commenced steps to speed up the rights issue to ensure that the offer proceeds get to the company by the third quarter of this year.
The net proceeds of the rights issue estimated at about N1.5 billion would set up a 12 megawatts power plant for the company through purchase of four megawatts generating sets.
Part of the proceeds would also be used to purchase equipment to store, blend and burn in the cement kiln in furtherance of the company alternative energy programme.
Speaking at the extra-ordinary general meeting, Engineer Ibrahim Gobir, Chairman, of the company said the rights issue would enhance the growth of the company as the new power plant and alternative energy project would greatly reduced cost of operations.
He said the board was committed to implement growth initiatives that would stabilise the operations of the company and ensure better returns to shareholders.
Earlier, Mr Alf Karlsen, managing director, Cement Company of Northern Nigeria (CCNN) Plc, said energy projects were important to the sustainable profitable operations of the company noting that costs of heavy fuels and diesels constituted about 40 per cent of total costs in 2006.
He pointed out that with the completion of the company-owned power plant, CCNN would quit the leasing arrangements that it has been using for energy generation since 2001, thus in a better position to manage its energy costs.
\"Replacing a portion of the LPFO we used for heating the kiln and producing clinker with biomass like rice husk and peanuts shells, will further reduce energy costs in the production process,\" Karlsen said.
According to him, since CCNN does not have access to gas now like its competitors in the southern part of the country, it has to utilise the alternatives it can find to counterbalance any cost disadvantages the competitors might have.
He expressed optimism that the rights issue would be fully subscribed as shareholders are fully in supports of the business development programme of the company.
Karlsen noted that the company is being repositioned for sustainable growth.
According to him, operational and technical problems that adversely affected the profitability of the company in recent period are being addressed to forestall disruption in production that usually lead to operational losses for the company.
He explained that the company has commenced aggressive facilities replacement and refurbishment programme since 2001, adding that additional investments have been made this year to enhance the operations of the company.
He added that the replacement of machineries and refurbishment of the kiln would forestall break down in production and sustain increasing capacity utilisation that began in 2002.
Karlsen said the company has put in place efficient monitoring system that would facilitate effective maintenance of machineries and other facilities.
The approval of the rights issue showed the willingness of Heidelberg Cement (HC) Group, world\'s fourth largest cement supplier, and other key stakeholders to inject about N1.56 billion new equity funds.
Heidelberg Cement, through its subsidiary, Scancem International ANS, is expected to inject about N791 million into CCNN, but could up the commitment. Three other key stakeholders, Nasdal Bap Nigeria Limited, Dantata Investment & Security Company Limited and five Northern States are expected to inject N184 million, N129.5 million and N199.7 million respectively.- Guardian