PPC works to reposition business
PPC Limited, the South Africa headquartered cement maker with operations in Zimbabwe, has made headway in restructuring and financing its business, the company said in an update this week.
The cement making giant, which owes millions of rands to lenders including South African banks, said it has reached “important milestones” in its quest to attaining a “sustainable capital structure”.
The said milestones include concluding “an overarching term sheet with its two primary South African lenders for the provision of among other things the extension by another year, till September 2021, of all short term banking facilities that were in place at financial year-end.
“All long term facilities that were in place at financial year-end will remain in place, with the extension of tenor of one of the facilities for an additional six months,” PPC said.
The term sheets include a deferral of scheduled interest and capital repayments on long term facilities until March 2021. The 128-year-old business managed to arrange for a waiver and condonement of covenant breaches under existing facilities and ongoing compliance with amended covenants including EBITDA and liquidity headroom.
The company committed to reducing the levels of gearing in South Africa through a combination of a capital raise and asset sales.
“Any capital raise is conditional on the implementation of the other Project steps, as previously communicated to shareholders,” it said in restructuring and refinancing update.
The Group has since commenced the process of formalising the term sheet and security arrangements.
Meanwhile, the cement maker, which is currently suspended from trading on the Zimbabwe Stock Exchange, has signed a new working capital facility with its third South African lender under similar terms and conditions to the above, providing access to ongoing liquidity until December 2021.
In the Democratic Republic of Congo, PPC has negotiated a term sheet with its lender providing for a standstill to allow for the implementation of a long term restructuring plan.
Key to the term sheet is the initial standstill period to December 31, 2020, with possibility of extension to March 31, 2021 subject to certain extension milestones being met related to the long term restructuring plan.
It includes forbearance of unpaid principal amortisation to date and scheduled principal amortisation until the end of the standstill period.
Key subsequent steps in the restructuring and refinance project
As a final step, and in line with the commitment given to the SA lenders, consideration will be given to PPC raising capital from its shareholders by way of a rights issue in order to strengthen the balance sheet and enable the broader restructuring. A capital raise at the Group level is conditional on PPC reaching a satisfactory outcome on the above Project steps with the timing, quantum and terms thereof only to be determined once the above steps have been achieved.
The restructuring and refinance project is still targeted for completion by March 31, 2021, “although no assurance can be given that the various corporate actions will be completed by such date,” PPC said.-herald
