South Africa: PPC sets terms for its US$280m rights issue

PPC has set terms for its ZAR4bn (US$280m) rights issue after the deal was almost unanimously approved by shareholders at the start of August.

The rights issue has been talked about by the company since December 2015. Yet it has become all the more urgent and complex since S&P downgraded the company’s credit rating from A to BB- in May.

“That triggered the need for the capital increase,” a banker on the deal said.

PPC is offering 1bn new shares at ZAR4/share, a discount of 55.5 per cent to its closing price of ZAR8.99 on Friday 19 August.  Shareholders will receive 160.06486 shares for every 100 already held.

PPC has received ZAR2bn in bank guarantees to back the payouts in the short term but will use the proceeds of the rights issue to clear the debts.

Over the last six years, PPC has invested in projects in Rwanda, the Democratic Republic of Congo, Zimbabwe and Ethiopia. As well as redeeming its bonds, PPC will use the remaining ZAR2bn to finance its expansion plans and existing projects in these African markets.