PPC may raise $450m to fund Africa expansion

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06-11-2014
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Moneyweb
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Plans to generate 40% of revenue from outside South Africa by 2017.

PPC, South Africa’s largest cement maker, has agreed in principle to a $225 million loan facility and could raise twice that amount to fund expansion in Africa, according to Chairman Bheki Sibiya.

Sibiya yesterday received a letter from an institution indicating their support to finance the company’s projects on the continent, the chairman said by phone today. PPC may raise as much $450 million from the unnamed lender, Sibiya said.

PPC is expanding in African countries where demand for cement outstrips supply, and plans to generate 40% of revenue from outside South Africa by 2017. The strategy is at risk because a deal to obtain $200 million of funding is close to collapse, former Chief Executive Officer Ketso Gordhan said November 4. Gordhan resigned in September after an attempt to fire Chief Financial Officer Tryphosa Ramano was blocked by the board. He is trying to engineer his return.

“What he is saying is devoid of any basis,” Sibiya said. “Since it is untrue, it cannot hamper our growth. The institution is still keen, we are liaising with them and they have written to us to specifically indicate that they are keen to do business with PPC.”

Without the funding, the purchase of a 49% stake in Hodna Cement of Algeria may not happen, Gordhan said, while potential new deals may also not be realized. He wanted to fire Ramano partly because of her handling of the potential deal, both Gordhan and PPC have said. PPC shares declined 0.7% to R28.21 rand as of 13:24 pm in Johannesburg.

“The due diligence is likely to be completed and therefore we are moving toward the signing of the agreement,” Sibiya said of the loan. “We still have other sources of funding, maybe marginally more expensive but we have a good pipeline of funding options for our projects .”

PPC will hold a shareholders’ meeting next month to vote on the removal of the entire board following a request by investors including Foord Asset Management. The current group of directors has the support of Africa’s biggest fund manager and 11% PPC shareholder the Public Investment Corp., according to Sibiya.