Johannesburg - Cement maker PPC took another step towards resolving its liquidity problems yesterday when shareholders voted overwhelmingly in favour of resolutions that would allow the listed cement and lime producer to embark on a R4 billion rights issue.
Darryl Castle, PPC’s chief executive, said the meeting was “very quiet”, there were no questions and there was about 99.5 percent support for most of the resolutions.
Changes
The resolutions included increasing PPC’s authorised stated capital from 700 million to 10 billion PPC ordinary shares; changes to the company’s memorandum of incorporation; and the granting of a general authority to the directors to issue the additional PPC shares in the authorised but unissued stated capital of PPC as may be required for the purpose of implementing the proposed rights offer.
“This is a pleasing result for PPC. It places us firmly on a path to resolving our immediate liquidity challenges, enabling us to pursue our corporate strategy,” Castle said.
“PPC is fundamentally strong and profitable with a solid operating base.”
Castle said he was confident that the company had appropriate plans in place to navigate the current economic landscape by driving cost efficiencies and leveraging its capabilities to achieve operational excellence.
“We are on track to complete our sizeable projects in the DRC, Ethiopia and Zimbabwe which, in the medium term, will start to contribute to PPC’s revenue stream,” he said.
Castle said the terms of the rights offer would be circulated to shareholders towards the end of this month.
A rights offer typically took about three weeks after the announcement was made to conclude, which meant PPC’s rights offer would be concluded by the middle to end of September, he added.
Repay debt
The capital raised from the rights issue would largely be used to repay debt funders for a guarantee extended to PPC bondholders, an existing term facility that redeemed a PPC bond in March this year and the redemption of black economic empowerment debt that matures in December.
PPC said previously it was far advanced with an orderly capital raise process when it was interrupted by S&P’s ratings downgrade in June, which meant it needed to accelerate the capital raise and increase the quantum to ensure it could pay down the required debt and strengthen the balance sheet.
PPC shares rose 0.51 percent to close at R7.92 on the JSE yesterday.
BUSINESS REPORT