The Public Investment Corporation (PIC) has reached an agreement with Swiss group Holcim over a restructuring plan for AfriSam to prevent South Africa’s second- biggest cement maker from defaulting on R12-billion in debt repayments due early next month.
The restructuring would “significantly” reduce the risk of default, the PIC said in a statement.
Holcim retained a 15% stake in AfriSam when it facili- tated the creation of the company in 2006 by selling 37% of its South African business to black investors led by Bunker Hills.
Holcim and Bunker Hills initially opposed the PIC’s restructuring plan, which involved the PIC converting its preference shares into equity to reduce AfriSam’s debt by R15-billion, diluting other shareholders’ stakes to a negligible perentage.
The PIC confirmed that it had converted its debt into equity and exercised its rights in terms of the pledge negotiated as security for the original deal, and that it now owned 99% of AfriSam.
The corporation indicated, however, that it intended to hold only about 57% of AfriSam after the restructuring had been completed. Holcim and Bunker Hills would also have an option to increase their position in AfriSam.
“Even though shareholders have not always been in agreement on the technical mechanisms that would form part of the restructuring, we have made significant progress over the last month and have been able to cross the Rubicon, so to speak,” the PIC said.
The deal would reduce AfriSam’s debt to R6.5-billion and would ensure job security for the over 1 800 employees.
“This development allows AfriSam to focus on its opera- tional fundamentals, as well as grow the business, and, most importantly, allows for the protection of the value of the Government Employees Pension Fund investment,” the PIC, which manages about R1-trillion in State pensions, said in a statement.
Holcim said last week that it had written off €343-million of its investment in AfriSam.