PIC blocked in move to redeem Afrisam debt, take control

PIC blocked in move to redeem Afrisam debt, take control
Published: 02 November 2011

The Public Investment Corp’s (PIC) bid to redeem debt in Afrisam Ltd has been temporarily stopped by the Pretoria High Court, blocking the money manager’s bid to gain control of South Africa’s second-largest cement producer, reports Bloomberg.

Bunker Hills Investments Ltd. won a court interdict to prevent the state-owned pension-fund manager from converting ZAR4.7bn (US$579m) of preference shares into equity, Peter Tshisevhe, a lawyer for Bunker Hills, said yesterday, citing the judgment. The court ruling will have a “notable destructive effect on company management and operations,” the PIC said.

The PIC and former MTN Group Ltd. Chief Executive Officer Phuthuma Nhleko are bidding to convert debt they own in Afrisam into shares as interest repayments threaten Afrisam’s ability to continue operating. Holcim Ltd in 2006 created Afrisam by selling most of its South African business to black investors led by Bunker Hills.

Bunker Hills, which owns 37 percent of Afrisam, and Holcim, which retained a 15 pe rcent stake, have said they oppose the debt conversion because it will dilute existing shareholders. Afrisam management hold 13 per cent of the company, the Pretoria- based PIC, which manages ZAR1trn in government-employee pensions, has 20 per cent and community trusts the balance.

Afrisam needs between ZAR3bn-6bn, which Bunker Hills doesn’t immediately have access to, Mofasi Lekota, a director at Johannesburg-based Bunker Hills said last month. It must settle more than EUR1bn of senior-debt by February.