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Johannesburg - Aveng, South Africa’s second- biggest construction company, plans to sell convertible debt of about 1.5 billion rand as the builder diversifies its sources of funding and bankrolls growth.

The unsecured five-year convertible bond is expected to have a coupon ranging from 6.75 percent to 7.5 percent, the Johannesburg-based company said in a statement today.

The bonds will probably be priced today and be settled about July 23.

Aveng has the option to raise an additional 500 million rand if there’s enough demand, it said.

“Aveng intends to use the net proceeds from the offering to repay certain existing debt facilities, extend its debt maturity profile,” the company said.

“The offering forms part of the company’s strategy to manage its liquidity needs, diversify its funding sources and reduce its reliance on bank debt, and to position itself to take advantage of growth opportunities.”

South African construction companies are seeking growth on the continent as the domestic economy slows.

Aveng has a revolving outstanding debt facility of 1 billion rand, maturing in 2016, according to data compiled by Bloomberg.

Aveng shares fell 4.4 percent to 22.40 rand as of 9:47 a.m. in Johannesburg, extending their two-day decline to 7.5 percent, the biggest on an intraday basis since December.

The stock has weakened 15 percent this year, compared with a 9 percent decrease for larger competitor Murray & Roberts.

Barclays and JPMorgan Chase are the joint bookrunners of the bond sale, according to the statement.

Nedbank Capital, a unit of Johannesburg-based Nedbank, is acting as co-manager. - Bloomberg News