Thursday, November 17, 2016 11:50 AM /NSE
This Explanatory Statement has been prepared to provide all the material information to all the Shareholders of AshakaCem Plc. (“AshakaCem” or “the Company”), in respect of the Special Business to be considered at the Extra-Ordinary Meeting, in the accompanying Notice.
In October 2014, Lafarge Africa acquired 1,312,444,260 shares being 58.61% of Ashaka Cement Plc (”AshakaCem”) from Lafarge SA. This acquisition triggered a Mandatory Tender Offer (“MTO”) under the provisions of Section 132(1)(a) of the Investment & Securities Act (No. 29 of 2007), which was made by Lafarge Africa in December 2014.
At the conclusion of the MTO, Lafarge Africa acquired an additional 534,144,592 shares of AshakaCem thus increasing its equity stake to 82.46% leaving Minority Shareholders holding 17.54%.
The MTO was made during the election campaigns of 2015 and in the shadow of the security challenges in North-Eastern Nigeria. Notwithstanding the best efforts of Lafarge Africa and its advisers, there were a number of shareholders who were unable to participate in the MTO given logistics and other difficulties experienced. Consequently, some shareholders sought another opportunity to participate in a tender of their shares.
A Voluntary Tender Offer (“VTO”) to minority shareholders was therefore made by Lafarge Africa in May 2016. The VTO has recently been concluded and a further 56,161,661 shares were tendered thus increasing Lafarge Africa’s shareholding to 84.97% with minority shareholders holding 15.03%.
Following the MTO and VTO transactions, AshakaCem’s Free Float currently stands at 15.03%, significantly below the NSE’s minimum Free Float of 20.00%. It is not improbable that given this Free Float deficiency, the NSE could take enforcement action and initiate a Regulatory Delisting, given that the Free Float deficiency is not likely to be remedied
Through the Voluntary Delisting of AshakaCem, the Directors of the Company will be exercising a regulatory provision that will shield the Company from any enforcement action that the Exchange may effect, for example by way of a Regulatory Delisting in light of the outstanding Free Float deficiency.
Furthermore, through the Voluntary Delisting process, the Company will be providing an Exit Consideration to minority shareholders who do not wish to remain in an unlisted company.
Over the last 5 years, there is little or no trading activity with only o.20% of the shares held by the minority shareholders being traded. There has also been a measurable fall in trading volumes over the last twelve (12) months from 200,090 units in 2015 to 77,810 units in the same period in 2016.
Neither the Company nor any shareholders are benefiting from the continued listing as shareholders are not getting any exit opportunity and their investments have been locked up and they find it difficult to dispose of their shareholding.
Moreover, the Company is bearing unnecessary cost in complying with its listing obligations. The Exit Consideration provides all shareholders the opportunity to benefit from the more diversified earnings of Lafarge Africa Plc.
The Board of AshakaCem proposes to delist all of the ordinary issued share capital of AshakaCem from listing on the Official List and from trading on the Main Market of the Nigerian Stock Exchange. (Voluntary Delisting) .
Given that less than 20% of the listed shares of the Company are held by investing public. AshakaCem is in violation of the Listing Rules and thus liable to be mandatorily delisted by The Nigerian Stock Exchange. Through the Voluntary Delisting of AshakaCem, the Directors of the Company will be shielding the Company from any enforcement action or sanction that the Nigerian Stock Exchange may impose, for example by way of a mandatory Regulatory Delisting and potential reputational damage to the Company.
The Voluntary Delisting will not occasion loss of the shares held by the minority shareholders as such the shareholders may retain their membership in the unlisted Company. Furthermore, through the Voluntary Delisting process, the minority shareholders - who do not wish to be members of an unlisted company – will have an opportunity to exit the Company.
a. Exit Options and Consideration
As part of the requirements of the NSE for Voluntary Delisting, the Board of Directors are required to provide an exit opportunity to the shareholders of AshakaCem who desire to exit the Company ahead of the Delisting.
In furtherance thereof, the shareholders of AshakaCem may exit the Company prior to the Delisting by:
i. trading their shares on The Floor of the Nigerian Stock Exchange through their nominated Stockbroker;
ii. receiving consideration from Lafarge Africa Plc (‘’Lafarge Africa’’) (‘’the Exit Consideration’’) in exchange for transferring their shares, on the terms stated below
· 57 new Lafarge Africa shares2 for 202 AshakaCem shares held as at the date of the Special Resolution approving the Voluntary Delisting; and
· A cash consideration of N2 per share (“Additional Cash Consideration”) will be paid to every shareholder exchanging their AshakaCem shares for Lafarge Africa shares pursa.
The consideration that is to be provided to shareholders of AshakaCem by Lafarge Africa, are on the same terms as the previous MTO and VTO made by Lafarge Africa.
Where a shareholder desires to remain a shareholder of AshakaCem, such shareholder shall be free to do so and there is no obligation to trade their shares or receive the Exit Consideration.
b. Conditions Precedent
The Voluntary Delisting will become effective upon occurrence of the following events:
i. if a resolution is passed by the Existing Shareholders representing not less than three-fourth (3 /4) in value of the Company’s shares - present and voting, either in person or by proxy - approving the Voluntary Delisting;
ii. once written approval of the NSE is obtained to the Voluntary Delisting;
iii. three (3) months from the date of the Extra-Ordinary General Meeting. 4.
Effect of the Delisting
Upon the Delisting of AshakaCem, the shares of the Company will no longer be available for trading on The Nigerian Stock Exchange. It is envisaged that the delisted AshakaCem will continue its operations, as an unlisted company.
The operations of the Company will continue to be domiciled in the present location in Ashaka, Gombe State, in recognition of its strategic importance to North-Eastern Nigerian and in recognition of and deference to the very cordial relationship with the host community.
Plan for Employees
The Voluntary Delisting of the Company will not have any impact on the existing contracts of employment.
The Voluntary Delisting of the Company will not have any impact on the Board of Directors of AshakaCem.
The taxation consequences of the exercise of an exit option will depend on the jurisdiction in which each shareholder is resident for tax purposes.
Under current Nigerian tax legislation, any gains realized by a shareholder from receiving the Exit Consideration should not give rise to any chargeable capital gains tax or stamp duty.
However, this statement is not intended to be, and should not be construed to be, legal or tax advice to any particular shareholder.
Shareholders who are in doubt about their taxation position, or who are subject to taxation in a jurisdiction outside Nigeria, are strongly advised to consult their own professional advisers without delay as to the consequences of exercising any of the exit options.
Meeting to Approve the Voluntary Delisting
At the Extraordinary General Meeting (“EGM”) scheduled to hold on December 19, 2016, the shareholders of AshakaCem will consider and, if thought fit, approve the Voluntary Delisting.
At the EGM, each shareholder - entitled to vote - will be entitled to one vote for every ordinary share held. In the event that the resolutions are approved by the requisite majority of shareholders, AshakaCem will submit an application to The Nigerian Stock Exchange for the approval of the Voluntary Delisting.
Actions to Be Taken
Attendance at the meeting, for purposes of voting on the resolution that will be proposed to shareholders. In the alternative, the submission of a Proxy Form for purposes of voting at the meeting should attendance not be possible. The attached form should be duly completed and returned to the Registrars.
The submission of the Proxy Form will not preclude attendance at the meeting, although the submitted Proxy Form will not be valid for voting purposes in that circumstance. 10.
At the expiration of the three (3) month regulatory notice period, the AshakaCem shareholders that have opted to exit the Company will receive Lafarge Africa shares as well the cash consideration.
The share will be settled into the CSCS account of opting shareholders, with share certificates being issued to shareholders that do not have CSCS accounts.
The cash consideration will be settled by way of electronic transfer to the respective bank accounts of the exiting shareholders.
Consideration Warrants will be issued to shareholders that do not provide details of their bank account.
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