PPC, SA’s biggest cement maker, is considering a rights issue of about R1.25bn to refinance both its domestic and international operations, according to people familiar with the matter.

The Johannesburg-based company owes lenders including FirstRand’s Rand Merchant Bank, Nedbank and Standard Bank a combined R750m by the end of March, said the people, who asked not to be identified as the plans are private. The balance of the funding effort will go towards PPC’s other units across Sub-Saharan Africa, they said.

The 128-year-old business was struggling to manage a slump in demand for cement in SA and an inflow of cheaper Chinese imports even before government efforts to contain the coronavirus outbreak hampered building projects. While President Cyril Ramaphosa has identified privately funded infrastructure projects as key to an economic revival, the plan is at an early stage and is unlikely to affect PPC’s looming debt deadlines.

The shares have slumped by 66% in 2020, valuing the cement maker at R1.3bn.

A spokesperson for PPC said the company will provide an update on capital restructuring plans when appropriate. RMB, Nedbank and Standard Bank all declined to comment.

DRC debt

The cement maker has hired Gleacher Shacklock to seek more favourable terms for debt in the Democratic Republic of the Congo (DRC), said the people. The adviser is in talks with international lenders, which include the International Finance Corporation (IFC) and the Eastern and Southern African Trade Development Bank (TDB), they said. Gleacher, the IFC and the TDB could not immediately be reached for comment.

PPC has not reported financials since its half-year results in November, when it had gross debt of R5.1bn. The company has since taken advantage of a regulator-granted extension to belatedly release annual figures to end-March on August 31.

PPC said in July earnings fell more than 20% in that period and that lenders supported its efforts to navigate the crisis.

Money manager Value Capital Partners has been building a stake in PPC, becoming the second-largest shareholder, and its chair, Anthony Ball, recently took up an executive role at the cement maker to help improve its capital base.


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