PPC sells its lime business for R515 million in restructuring project

PPC HAS SOLD its PPC Lime operation as part of a restructuring project to Kgatelopele Lime, a new company that has Swiss mining and minerals resources group IMR Group as a major shareholder, for R515 million.

PPC plans to use the net proceeds of R500m to degear PPC’s South African balance sheet.

In terms of the restructuring project, PPC’s South African lenders agreed to review the need for a R750m group capital raise if the South African businesses continue to degear towards sustainable debt levels.

PPC’s share price gained 3.7 percent to R3.10 yesterday morning.

The share has risen steadily from a 12-month low of 43 cents early in November, after the group in the meantime reported relatively robust double-digit cement product sales.

Kgatelopele Lime was formed to acquire PPC Lime, and it has IMR South Africa as a shareholder, which is, in turn, part of IMR Group.

Established in 2004, IMR Group has a global footprint of assets that generate $3 billion (about R43.43bn) annually in revenue.

Kgatelopele’s shareholders also include Kolobe Nala Investment Lime (KNI), a 100 percent black-owned, mining-focused investment holding company.

KNI is indirectly owned by Billy Mawasha, who has held various executive positions at AngloGold Ashanti, Kumba Iron Ore and Rio Tinto.

He is currently independent non-executive director of Murray & Roberts and Metair Investments.

Another shareholder is HEX2M Energy Holdings (HEX), a 100 percent black youth-owned mining-focused investment holding company owned by Sizwe Mngomezulu.

PPC chief executive Roland van Wijnen said the divestment was vital for the capital restructuring strategy to reduce South African debt.

“We are excited to be acquiring this asset and look forward to working with all stakeholders to continue this asset’s legacy,” said KNI chief executive Billy Mawasha in a statement.

Once the sale is concluded, PPC Lime is expected to be 39 percent black-owned, being 29 percent owned by strategic black economic empowerment investors, 5 percent owned by relevant PPC Lime employees, and 5 percent by host communities of PPC Lime, in accordance with the requirements of the 2018 Mining Charter.

PPC Lime generated revenue and earnings before interest, taxes, depreciation and amortisation of R858m and R110m respectively for the year to March 31, 2020.

The attributable loss for the six months to September 30, 2020, came to R2m and net asset value was R435m.

PPC’s shares closed 10.37 percent higher at R3.28 on the Johannesburg Stock Exchange yesterday.