PPC in talks with lenders before possible rights issue

Cement maker PPC said it was still in talks with lenders before pulling the trigger on a rights issue.

Bloomberg reported on Wednesday that the cement maker, which has a market capitalisation of R1.27bn as of Thursday afternoon, was considering a R1.25bn rights offer as it battles with a slump in demand for cement in SA and an inflow of cheaper Chinese imports.

PPC said on Thursday its needs to restructure and refinance the group was primarily a result of its investment in PPC Barnet in Democratic Republic of Congo (DRC). The group was considering a rights issue, but the timing of it and any amount, depended on, among other things, discussions with lenders.

PPC has been providing ongoing deficiency funding to PPC Barnet, and the need to refinance has been worsened by the effects of the Covid-19 pandemic, the group said.

The DRC operation has weighed on the group in recent years, which reported in PPC Barnet’s deficiency funding was R151m during its 2019 financial year, bringing total deficiency funding to $54m (R945m) as at the end of March 2019.

The group has said previously that since production commenced at the DRC Plant in April 2017, it had experienced challenges in penetrating the DRC market. “The political, regulatory and macroeconomic environments continue to cast doubt on the economic turnaround of the country,” PPC said in 2019 results, when it reported group net debt of R4.6bn.

The group said on Thursday it wanted to complete its restructuring and refinancing project by the end of March 2021, although “no assurance can be given that the various corporate actions will be completed by such date.”

PPC said it had “mobilised significant internal and external resources” to implement the project, including the appointment of Antony Ball as executive director to lead it.

Ball, who had been an independent executive director at PPC since March 2018, was appointed as an executive director in June.