Shareholders Approve N2bn Rights Issue For CCNN

 16th May 2007

By Peter Egwuatu

Shareholders of the Cement Company of Northern Nigeria (CCNN) Plc have mandated the board of the company to raise about N1.6 billion new equity funds to further finance its business development programme.

Members of the company, at a well-attended extra-ordinary general meeting held in Sokoto last Thursday, unanimously authorized the directors to issue new ordinary shares of 50 kobo each to existing shareholders, thus stepping up the plan of the company to access the capital market.

The net proceeds of the rights issue, estimated at about N1.5 billion, would be used to set up a 12 megawatts power plant for the company through purchase of three 4 megawatts generating sets.
Part of the net proceeds would also be used to purchase equipment to store, blend and burn biomass in the cement kiln in furtherance of the company’s alternative energy programme.

Speaking at the extra-ordinary general meeting, Engineer Ibrahim Gobir, Chairman, Cement Company of Northern Nigeria (CCNN) Plc, 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 stabilize 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 fuel and diesel 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, and will 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 utilize the alternatives it can find to counter-balance 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.
The managing director  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.

According to him, “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.

Heidelberg Cement, through Scancem International, has gradually increased its shareholding in CCNN from 40 per cent acquired from the federal government during privatisation of CCNN in 2000, to 50.7 per cent equity stake through additional subscriptions to two rights issues during the period. This has led to reduction in shareholdings by the five Northern States of Kebbi, Sokoto, Kano, Kaduna, Jigawa and Katsina from 36.8 per cent to 12.8 per cent.

Nasdal Bap Nigeria and Dantata Investment hold 11.8 per cent and 8.3 per cent equity stake respectively while another foreign company, Ferrostal AG, holds 0.1 per cent. Nigerian investing public hold the balance of 16.3 per cent of the equities.

Source: vanguard

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