PPC has ‘substantially agreed’ a new BEE deal
PPC, the listed cement and lime producer, has “substantially agreed” the structure and how it would be implementing a new broad-based black economic empowerment (BBBEE) transaction but is waiting for the release of the new mining charter before proceeding with the transaction.
PPC chief executive Darryll Castle admitted this week there were some uncertainties related to the proposed BBBEE transaction, one of which was the mining charter.
“So we think it’s prudent to wait and see how that looks to see if what we have planned gels with that. If changes are required because of it (the charter), we will reprocess and change what we have got, which might mean it comes some time after that,” he said.
Castle said PPC also had the proposed merger with Afrisam transaction “going on in the background” and would have to assess the impact of the Afrisam transaction on the company’s new BBBEE transaction.
He expected “in the next while” to know what PPC’s new BBBEE transaction would look like.
Mineral Resources Minister Mosebenzi Zwane said this week at the reopening of the Highveld structural mill in Emalahleni that the new mining charter would be gazetted next week. In terms of the previous charter, the government required 26 percent of mines should be in black hands.
Castle said the timing of PPC’s BBBEE transaction was not absolutely dependent on the release of the mining charter.
He added PPC had an obligation to meet the current mining charter requirements but the company was under represented in its BBBEE scheme because of dilution caused by its R4 billion rights issue last year and the unwinding of its first BBBEE transaction.
Castle said there was not an immediate impact because PPC’s BBBEE rating was below the required threshold but the company was well aware it needed to put a new BBBEE transaction in place to get to the appropriate level.
He said it would become an issue but at the election of the authorities, there was a reasonable period in which companies had to comply.
PPC this week reported a 93 percent slump in headline earnings a share to 7c for the year to March from 107c in the previous year.
Earnings before interest, tax, depreciation and amortisation (Ebitda) declined by 13 percent to R2.06bn from R2.38bn.
Castle said the lower Ebitda reflected a tougher operating environment, particularly in South Africa but there were a whole raft of issues below Ebitda in PPC’s income statement that resulted in the dramatic drop in earnings.
They included the cost of PPC unwinding its first BBBEE scheme, which resulted in a cash inflow but also a corresponding international financial reporting standards charge of more than R200m.
PPC shares yesterday fell 0.96 percent on the JSE to close at R5.15.
There are some hurdles, one of which is the mining charter, the cement and lime producer admits
PPC is poised to cement a new broad-based back economic transformation transaction.