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In reiterating the objectives and current status of its restructuring and refinancing project, JSE-listed cement manufacturer PPC on August 13 said it remained on track to reach the necessary agreements for sustainable capitalisation of the company across the geographies that it operates in.
The need to restructure and refinance primarily stemmed from the group’s investment in PPC Barnet, in the Democratic Republic of Congo (DRC), while the refinancing need has been exacerbated by the economic effects of Covid-19.
PPC announced its restructuring and refinancing plan in November 2019, to reduce its contingencies in the DRC and get ahead with its debt levels in South Africa.
PPC aims to reach agreement with its South African lenders to provide ongoing access to unused facilities, reset covenants, defer payments and extend renewal dates of the general banking facilities to provide greater financial flexibility in the context of the uncertainties of the current trading environment.
The company plans to reach an arrangement with PPC Barnet’s lenders on its capital and interest obligations as a precursor to agreeing a sustainable capital structure for PPC Barnet and relieve PPC of its contingent obligations.
Additionally, PPC wants to undertake a capital raise to fund investments in the international businesses and support the restructuring claims of PPC Barnet lenders.
“While this will likely result in a dilution of PPC’s interest in PPC International, it is envisaged that PPC International will remain a subsidiary company of the group,” the company explains.
PPC highlights that any capital raise will be conditional on the group reaching a satisfactory outcome on the above, while consideration will be given to a capital raise by way of a PPC rights issue to strengthen the balance sheet and enable the broader restructuring, although the timing, quantum and the terms thereof will only be determined once the other steps have been achieved.
The board remains confident that implementation of these restructuring plans will lead to the company being sustainably capitalised and self-sufficient on a standalone basis across the key geographies in which it operates, and well positioned to pursue respective growth and shareholder value-creation strategies.
PPC has a lime manufacturing facility and 11 cement factories in six African countries – South Africa, Botswana, the DRC, Ethiopia, Rwanda and Zimbabwe.
The board has mobilised significant internal and external resources to implement the restructuring and refinancing project, including by appointing Antony Ball as executive director to lead the project, and Gleacher Shacklock as financial adviser to advise on achieving the project.
The restructuring and refinancing is expected to be completed by March 31 next year, although no assurance can be given that the various corporate actions will be completed by such date.
In the meantime, discussions with the various lenders continue on a constructive basis.