PPC busy on new B-BBEE struc­ture

SA names the UK, US, China and In­dia as key trad­ing part­ners

The Star Early Edition - - BUSINESS REPORT - Ka­belo Khu­malo

JSE-listed ce­ment maker PPC said yes­ter­day it had started struc­tur­ing its new broad­based black eco­nomic em­pow­er­ment (B-BBEE) agree­ment after it had con­cluded sub­scrip­tion agree­ments of its first B-BBEE deal, from which the firm re­ceived R1 billion.

The deal has ad­versely af­fected the com­pany’s em­pow­er­ment cre­den­tials.

In 2008, the com­pany an­nounced that it had sold 15 per­cent of its eq­uity to com­mu­nity ser­vice groups (CSGs) and a strate­gic black part­ner (SBP) in a deal worth R2.7bn.

It had said new PPC shares to be is­sued to the SBP would be funded by a credit sale, while fund­ing with re­gards to CSGs and SBPs – which amounted to R1.5bn – was un­der­writ­ten by Stan­dard Bank.

The 15 per­cent was struc­tured to ben­e­fit, among oth­ers, PPC’s em­ploy­ees, an ed­u­ca­tion trust, two CSGs and a construction in­dus­try trust. In to­tal they had 8.15 per­cent of the shares. The re­main­ing 7 per­cent went to SBPs, women’s em­pow­er­ment group Nozala, black owned-and man­aged Peu, em­pow­er­ment in­vest­ment firm iLima Port­land con­sor­tium and broad-based group Cap­i­tal Edge.

Siob­han McCarthy, spokes­woman for PPC, said yes­ter­day that the con­clu­sion of the first sub­scrip­tion agree­ments did not mean the com­pany had im­me­di­ately re­gressed on its cur­rent em­pow­er­ment sta­tus.

“In De­cem­ber 2016 PPC was cer­ti­fied a level 4 con­trib­u­tor in terms of the amended generic codes. The com­pany’s rat­ing as a level 4 con­trib­u­tor is valid un­til De­cem­ber 2017,” said McCarthy.

Si­bonginkosi Nyanga, an an­a­lyst at Mo­men­tum SP Reid Se­cu­ri­ties, said the in­tro­duc­tion of the new B-BBEE codes meant that com­pa­nies had to relook at their em­pow­er­ment deals.

“The is­sue of the chang­ing of the codes meant most com­pa­nies, es­pe­cially in the min­ing sec­tor, would not be com­pli­ant. This means com­pa­nies must struc­ture new deals to com­ply,” Nyanga said.

The com­pany said as part of the com­pul­sory sub­scrip­tion agree­ments, SBPs and CSGs had sub­scribed for 15 mil­lion shares. The firm si­mul­ta­ne­ously bought back and can­celled 48.6 mil­lion shares at 10 cents per share.

The com­pany said it would use the R1bn to re­duce its debt and fund cap­i­tal ex­pen­di­ture, with its pri­mary fo­cus its Slurry Kiln 9 Project.

The com­pany’s Slurry project, sit­u­ated in the North West, will see the in­tro­duc­tion of a new clinker pro­duc­tion line at a cost of R1.5bn to R1.7bn, to boost over­all out­put to 5 500 tons per day by next year.

PPC said yes­ter­day that de­spite the trans­ac­tion hav­ing neg­a­tively im­pacted its em­pow­er­ment cre­den­tials, it would an­nounce its new B-BBEE deal in the first half of the year.


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