PPC considering asset sales and rights issue after deal with lenders
The share price of cement maker PPC was on track for its worst day in more than a month on Tuesday, after it said it had agreed to asset sales and a capital raise as part of a new agreement with lenders.
PPC said it had committed to reducing its gearing, a measure of how much of its operations are funded through debt. Any rights issue at the group level would be the final step in a long-term restructuring plan, the statement read.
PPC was still targeting March 2021 as the date for its restructuring to be completed, while lenders had agreed, among other things, to defer some repayments and extend some facilities.
The group had debt of R5.1bn as at the end of its six months to end-September, while its market capitalisation was at R1.08bn on Tuesday morning.
Bloomberg reported in August that the cement maker 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 at the time, however, its need 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.
In morning trade on Tuesday, PPC’s share was down 5.41% to 70c, on track for its worst day since July 30.
The group’s share has fallen 72% so far in 2020, and 95% over the past five years.