PPC Limited has sold its lime business in a move that will strengthen its balance sheet and may negate the need for a rights issue. It’s the latest positive step by the cement producer, which has been struggling with high debt and a tough market. Its business is also showing signs of a decent recovery from the Covid-19 pandemic.
The disposal of PPC Lime, which mines, manufactures and distributes reactive lime, hard burnt lime, hydrated lime, burnt dolomitic lime and raw limestone, forms part of the company’s restructuring a refinancing project, which has the support of its lenders. In March’s update on its restructuring and refinancing project, PPC said its local lenders had agreed to review the need for a capital raise of at least R750-million, which it committed to in August 2020, if its South African business continued to de-gear towards a sustainable debt metric of about two times earnings before interest, tax, depreciation and amortisation .
“With the announcement of this divestment, we have completed another commitment in line with our communicated restructuring plan.” Other issues still hanging over the group included its African operations outside South Africa and associated debt, although the debt restructure in the DRC provided some relief.
The group experienced a double-digit growth in cement sales from last July up to February, despite new Covid-19 restrictions in some markets. Group revenue increased by 7% period on period for the 11 months ended February and 14% for the five months ended February, driven primarily by strong cement demand in South Africa.