Cement maker PPC weighs rights issue

PPC, South Africa’s biggest cement maker, is considering a rights issue of about R1.25 billion to refinance both its domestic and international operations, according to people familiar with the matter.

The Johannesburg-based company owes lenders including FirstRand’s Rand Merchant Bank, Nedbank and Standard Bank a combined R750 million by the end of March, said the people, who asked not to be identified as the plans are private. The balance of the funding effort will go toward PPC’s other units across sub-Saharan Africa, they said.

The 128-year-old business was struggling to manage a slump in demand for cement in South Africa and an inflow of cheaper Chinese imports even before government efforts to contain the coronavirus outbreak hampered building projects. While President Cyril Ramaphosa has identified privately funded infrastructure projects as key to an economic revival, the plan is at an early stage and is unlikely to affect PPC’s looming debt deadlines.

The shares fell 14% as of 4:49 p.m. in Johannesburg, extending a slump for the year to 69%, valuing the cement maker at R1.2 billion.

A spokeswoman for PPC said the company will provide an update on capital restructuring plans when appropriate. RMB, Nedbank and Standard Bank all declined to comment.

Congo debt

The cement maker has hired Gleacher Shacklock LLP to seek more favorable terms for debt in the Democratic Republic of Congo, said the people. The adviser is in talks with international lenders, which include the International Finance Corp. and the Eastern and Southern African Trade Development Bank, or TDB, they said. Gleacher, the IFC and the TDB couldn’t immediately be reached for comment.

PPC hasn’t reported financials since its half-year results in November, when it had gross debt of R5.1 billion. The company has since taken advantage of a regulator-granted extension to belatedly release annual figures through March on August 31.

PPC said last month earnings fell more than 20% in that period and that lenders supported its efforts to navigate the crisis.

South African money manager Value Capital Partners has been building a stake in PPC, becoming the second-largest shareholder, and its chairman, Anthony Ball, recently took up an executive role at the cement maker to help improve its capital base.