Nampak share surges as disposal proceeds help cut debt by R1.6bn
The packaging group, with a market capitalisation of R586m, said it has obtained covenant relaxations from its lenders
The share price for packaging company Nampak climbed 45% on Wednesday, its biggest gain since September 2007, as the industrial group said it has made progress in reducing its dollar-denominated debt by $100m (about R1.66bn) thanks to recent disposals.
During the 11-month period to end-August, Nampak made progress in reducing its dollar debt using the R1.4bn net proceeds from the disposal of its glass division, and $16m from the sale of its Nigerian carton business.
In September 2019, Nampak agreed to sell its glass business to Isanti Glass 1, which is owned by Kwande Capital, a black-owned investment company, and SAB, for about R1.5bn.
The company said in April that it had entered into an agreement with Sweden-based AR Packaging Group for the sale of Nampak Cartons Nigeria.
Nampak, with a market capitalisation of R586m, said it has obtained covenant relaxations from its lenders for both the September 30 2020 and the March 31 2021 measurement periods.
The company said it is expected to reach normal covenant levels by September 2021. “It should be noted that the impact of Covid-19 and reduced economic activity in Angola were the key drivers in the need to obtain a relaxation in funding covenants.”
Nampak said in an update on Wednesday that trading is returning to normal as economic activity and consumer patterns recover due to the lifting of lockdown restrictions.
Nampak, which supplies packaging to the liquor industry, was heavily affected by the ban on alcohol sales during the lockdown period from March.
The company said it has renewed two supply contracts with multinational companies to supply beverage cans for the next three years. It has also secured two material contracts to supply beverage cans to new, large export customers.
“The bulk of these secured volumes will be delivered throughout the 2021 fiscal year and will boost the utilisation of the SA beverage can facilities. This will contribute towards improved earnings in that year and contribute significantly to closing the gap caused by the impact of Covid-19,” the company said.
Nampak’s share price jumped 45.16% to 90c on Wednesday. It has fallen 94% over the past three years, and 86% so far in 2020.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.