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Johannesburg - PPC [JSE:PPC] is in the final stages of negotiating a R2bn ($132m) bridging guarantee facility, seeking to shore up its balance sheet after a credit-rating cut and warnings of a possible liquidity squeeze.
South Africa’s biggest listed cement maker is also working on a plan to raise R3bn to R4bn, the Johannesburg-based company said in a statement on Tuesday, alongside financial results for the six months through March.
A syndicate of banks, made up of Standard Bank, Nedbank, Absa and FirstRand’s Rand Merchant Bank, has been mandated to assist with the capital raising.
PPC is being forced to raise funds after its credit rating was cut following investment in new African projects that have yet to contribute to cash flow. The company has plants under development in the Democratic Republic of Congo, Zimbabwe and Ethiopia to expand outside its home market, where cement-makers are battling tough competition and falling prices.
PPC net income rose 35% to R369m in the six months through March, while revenue fell 1% to R4.5bn.
S&P cut PPC’s long- and short-term corporate-credit ratings seven levels to below investment grade and placed its long-term rating on negative watch, the ratings company said May 30. As a result, holders of PPC’s R1.75bn of domestic medium-term notes can choose to redeem the securities and interest.
The bridging facility is “to settle the outstanding note obligations and provide the company with the appropriate funding requirements until the conclusion of the proposed capital raise”, PPC said.
