admin
The share price of JSE-listed packaging manufacturer Nampak fell around over 30 percent yesterday morning, following the group’s announcement of a potential rights offer of up to R2 billion during the first quarter of 2023.
It says it will convene an “extraordinary general meeting” and expects to publish an update around 15 December.
It noted in a Sens statement issued yesterday that the rights offer will assist in repaying its debt refinancing requirements of R1,35 billion by 31 March 2023 and, if successful, will further enable it to focus on delivering its growth strategy and result in a “simplified, more robust capital structure”.
The group says historical decisions to fund the African expansion mainly through US dollar debt has resulted in macroeconomic and operational pressures significantly straining its balance sheet, subsequently requiring it to seek relaxations from its funding partners.
“This has resulted in an increase in funding costs, which has been more acute in the context of the rising commodity prices and interest rate environment that has emerged since the onset of the war in Ukraine.”
Added to that, Nampak says several historic impairments, including the goodwill in Nigeria and asset impairments in Angola, with an expected credit loss raised in 2019 against the debt from the Reserve Bank of Zimbabwe, have all resulted in elevated levels of gearing.
“As pressures on the group’s fiscal position increased, the group has undertaken a number of self-help initiatives to de-lever the balance sheet and improve capital allocation. As a result, Nampak has become a small and more focused business,” it adds.
However, it says a high level of complexity remains with its operations spread across 10 African countries, many of which it says depends on commodities and are therefore vulnerable to price changes, currency instability and a lack of availability of foreign exchange.
“The group is also being disproportionally funded by a complex consortium of lenders with gearing levels exceeding shareholders’ equity.”
– Moneyweb
Moreover, it says self-help measures have not fully yielded the desired results for the year ended 30 September 2022.
It expects its headline earnings per share (Heps) to decrease by between 41 percent and 47 percent to between 33 cents and 37 cents.
Nampak adds that considering the proposed rights offer and associated capital raise, shareholders can expect to see the following in 2022 financial results due on 5 December:Moneyweb
Online Reporter