PPC’s restructuring plans on track
The group is in talks with its lenders from SA and Democratic Republic of Congo
Cement maker PPC, which is struggling under the weight of a R5.2bn debt load, said on Thursday that it had made steady progress with its ongoing restructuring and refinancing project.
Like its rivals, PPC has been battling to grow sales at a faster pace for much of the past decade as public and private sector clients cut back on infrastructure spending because of SA’s weak economy, prompting the company to load up on debt to build plants in Democratic Republic of Congo (DRC), Ethiopia and Rwanda.
The company said that in SA, all conditions precedent relating to the renewal of short- and long-term facilities with its SA lenders, including the registration of security, have been fulfilled.
The group also operates in DRC and said that negotiations were continuing with banks that lent to PPC Barnet, its subsidiary there.
PPC was on course to implement a sustainable capital structure for PPC Barnet and to remove any recourse to the larger PPC Ltd group for the provision of deficiency funding to these operations.
“The negotiations are being conducted under the terms of a formal standstill agreement, which is effective until March 31 2021. PPC and the DRC lenders target resolution of the matter ahead of March 31 2021,” it said.
The group was still working on the structured sales process of PPC Lime, with a number of nonbinding offers having been received by the end of January 2021 and shortlisted parties moving to a due diligence stage.
PPC was committed to an equity capital raise by the end of March 2021 to decrease the debt levels of its SA balance sheet. This may include tapping shareholders for as much as R1.25bn while the company's market capitalisation sits at R2.95bn.
But the company needed more time to complete the process.
“While positive progress is being made on the project, PPC will be formally engaging with its SA lenders to extend the timing of the capital raise by three months to the end of June 2021, when certainty on the key elements of the restructuring is expected,” it said.
Shareholders were advised to exercise caution when dealing in securities of the company until the funding arrangements with its respective lenders were finalised and details of the proposed restructuring and refinancing were published.
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