PPC South Africa’s largest publicly traded cement maker, said it received R4bn of bank guarantees to underwrite the sale of shares to existing investors, adding to facilities it received last week to redeem bonds. A group of lenders including Standard Bank Group Nedbank Group, FirstRand’s Rand Merchant Bank and Barclays’s Absa will lead the rights-offer process and provide the standby underwriting commitment, Johannesburg-based PPC said in a statement on Monday.
Standard Bank was appointed as sole global coordinator. The agreement comes after PPC on Friday announced that it obtained R2bn of guarantees from Absa, FirstRand and Standard Bank to back the early redemption of bonds. PPC is being forced to raise funds after S&P Global Ratings cut its credit rating to junk amid rising debt due to investment in new African projects, combined with a difficult trading environment in its home market.
“The execution of the irrevocable and unconditional guarantee in favour of note holders as well as the signing of the standby underwriting agreement are two major milestones,” chief executive officer Darryll Castle said in the statement. “These pave the way for the company to resolve its capital structure issues effectively, and focus its efforts on implementing its strategy going forward.” The stock has almost halved in 2016, the worst performer on the FTSE/JSE Africa All-Share Index. Bloomberg