Johannesburg - Elias Masilela, the chief executive of the
Public Investment Corporation (PIC), extended an olive branch to two key
shareholders of AfriSam who are opposing the PIC’s takeover bid of the cement
producer.
AfriSam's major shareholders - Bunker Hills and Holcim,
which jointly control 52% of the company - will go toe-to-toe with the PIC in
the North Gauteng High Court on Tuesday to prevent the state-owned asset
manager from converting a R4.7bn loan into equity.
This was given to a BEE consortium led by Bunker Hills four
years ago to buy a controlling stake in AfriSam.
If the PIC prevails, it will control about 90% of the cement
company, while Bunker Hills and Swiss investor Holcim will be reduced to
insignificant minority shareholders.
The PIC, owner of a 20% interest in AfriSam, wants Bunker
Hills to repay the R4.7bn (invested through preference shares) or face the
conversion.
Said Masilela: “The infighting has been unfortunate. As
shareholders of AfriSam, we could have managed this differently. None of us
will benefit by putting more stress on the company.”
Earlier this month, Bunker Hills won an urgent interdict
that prevented the PIC from taking control of AfriSam after the asset manager
tried to attach AfriSam shares belonging to Bunker Hills. On Tuesday, Bunker
Hills will seek to make the court order permanent.
But Masilela maintained that the infighting between AfriSam
investors was no big deal and could be resolved.
“We don’t see this as a crisis ...This is just a
misunderstanding between shareholders with different interests,” he said.
He said the PIC still considered AfriSam a good investment,
but the company needed to reduce its hefty and expensive debt, which eats up a
big chunk of its cash flow.
The cement maker is saddled with R19bn of debt and has been
battling to service it after the global economic recession squeezed its
profits.
In early February next year, the company has to settle about
R11bn of the debt with senior creditors.
But one of these senior creditors, Worldwide Africa
Investment Holdings, led by former MTN chief executive Phuthuma Nhleko, wants
to convert its portion of the senior debt it holds in AfriSam into equity, a
move that could further reduce the shareholdings of Bunker Hills and Holcim, as
they would be forced to accommodate the new equity investor.
Worldwide Africa Investment Holdings holds about 37% of
AfriSam's R11bn senior debt.
Masilela said the conversion of some of this gigantic debt
could help lessen the burden on the company.
“Some of the shareholders are creditors of AfriSam who can
convert some of the debt into shares, thereby boosting the cash flow of the
company.
Another option for restructuring AfriSam’s debt is to
replace the current expensive debt with affordable debt,” he said.
Two weeks ago, Stephan Olivier, the chief executive of
AfriSam, conceded that tough market conditions had necessitated that the
company restructure its debt with senior creditors.
“It is common cause that following the reorganisation that
saw a BEE consortium acquire control of the company in 2007, AfriSam is
indebted to senior noteholders and other funders.
“The decline in market conditions and profitability over the
past few years has made it necessary to restructure the company’s capital and
financial arrangements in a holistic manner.
“This could include the refinancing of debt and repayment
schedules on a sustainable basis,” Olivier said.
- City Press