Cement maker PPC has said that it planned a capital raise and net asset sales in order to reduce its debt.
The group said yesterday that it had also signed a new working capital facility with a third lender, which would give it access to cash until December 2021.
The group said that a waiver and condonement of possible covenant breaches had also been agreed as part of its restructuring. It said the rights issue to strengthen the balance sheet would be considered only once the restructuring plans were finalised.
Speculation in the media has the rights issue raising R1.25billion.
Last month, PPC reported accounting errors after its shares plunged more than 80percent in 12 months.
It said its operations were affected by the weak economy, anaemic infrastructure spending and the impact of the Covid-19 pandemic.
PPC has pushed back to the end of September the release of its annual results for the year to March, after taking advantage of a regulator-approved lockdown-related extension, and due to the capital restructuring plans.
However, an earnings loss of between 110cents and 130c per share was forecast, compared with a profit of 9c in 2019.
The group’s debt stood at R5billion at the interim stage last year.
PPC said the restructuring plan included raising capital in PPC International to fund its capital structure and investments, as well as support the restructuring of PPC Barnet lenders in Democratic Republic of Congo (DRC).
It said it had also reached an agreement with its two primary South African lenders that all short-term banking facilities would remain in place until at least September 2021.
PPC said all long-term facilities would also remain in place, while a deferral of scheduled interest and capital repayments on long-term facilities was agreed until March next year.
It said it hoped to have its full restructuring completed by then, adding the next phase of the project would involve the implementation of a long-term restructuring plan for PPC Barnet, and relieving PPC of its contingent obligations.
PPC said a debt standstill had been negotiated with lenders in the DRC so that the restructuring at PPC Barnet could be implemented.
PPC shares declined 13.51percent on the JSE yesterday to close at R0.64.