Nampak’s share falls as it flags headline loss
Debt-ridden packaging company Nampak’s share price fell on Friday after it announced that its interim headline earnings would go from a profit to a loss while it waited to determine the size of a rights offer to raise capital.
Negotiations to conclude credit-approved term sheets for a refinancing package for the next five years were progressing, with a milestone conclusion date of June 15, the company, valued at R449m on the JSE, said in a trading statement.
“These negotiations, together with the group’s progress in terms of the implementation of the restructuring plan, will determine the size of the required rights offer, which will be announced in due course as part of Nampak’s ongoing shareholder updates,” it said.
Nampak said its headline earnings of 35.6c from a year ago would come in at a headline loss of 53c-58c in the six months to end-March when it released its next interim results on May 24. This was largely because of higher net financing costs, net impairment losses and net devaluation losses arising from Angolan and Nigerian exchange rate movements.
Its share price fell as much as 19.18% by midmorning but recovered to close 10.96% lower at 65c.
It has fallen more than 90% in the past five years due to headwinds including forex losses, high levels of gearing including US dollar-denominated debt, and an inability to dispose of assets to meet debt obligations.
Nampak is under pressure to conclude the sale of its tubes business and exit East Africa to ensure the size of its rights offer is acceptable to shareholders.
Business Day reported in April that the company, which has paid no dividends since 2015, would probably sell equipment and machinery to reduce its R5bn debt burden.
Nampak CEO Erik Smuts resigned with immediate effect in April after three years at the helm shortly after the appointment of Michael Dorn as chief restructuring officer to oversee a plan that has been submitted to lenders for consideration.
Previous attempts at a rights offer resulted in pushback from activist shareholders, who argued that the proposed rights offer sum was too big and would dilute share values markedly if executed at the prevailing share price.