PPC CEO Darryll Castle
Photo by: Duane Daws
The share price of JSE-listed cement producer PPC rose by 8.9% on Monday morning after the company announced that it had entered into a standby underwriting agreement to support its proposed R4-billion rights offer.
PPC had appointed a syndicate of banks, including Standard Bank South Africa, Nedbank, Absa Bank and Rand Merchant Bank, as joint bookrunners to lead its proposed rights offer process. Standard Bank was appointed sole global coordinator of the rights offer.
The joint bookrunners provided PPC a standby underwriting commitment of R4-billion in relation to the proposed rights offer. This would be replaced by a formal underwriting commitment in due course, subject to the satisfactory fulfilment of the conditions precedent.
“The execution of the irrevocable and unconditional guarantee in favour of noteholders, as well as the signing of the standby underwriting agreement are two major milestones for PPC.
“These pave the way for the company to resolve its capital structure issues effectively and focus its efforts on implementing its strategy going forward,” said PPC CEO Darryll Castle.
PPC was planning to post a circular to shareholders during this week to convene an extraordinary general meeting in July to seek approval for the necessary resolutions required to implement the proposed rights offer.
The rights offer was expected to assist PPC in resolving liquidity problems following a recent downgrade by Standard & Poors’ Global Ratings, which had resulted in the early redemption of R1.75-billion to noteholders.
PPC’s shares rose to 819c early on Monday, compared with Friday’s close of 752c.