[South Africa] Kgatelopele Lime acquires PPC Lime for $39.1m
PPC and Kgatelopele Lime announced they have reached an agreement for the sale of PPC Lime to Kgatelopele Lime for $39.1million. PPC Lime is a wholly-owned subsidiary of PPC which commenced operations in 1954 in Lime Acres, Northern Cape on an extensive reserve of metallurgical quality limestone and dolomite. The business mines, manufactures and distributes reactive lime, hard burnt lime, hydrated lime, burnt dolomitic lime and raw limestone.
The divestment forms part of PPC’s ongoing capital restructuring and the effective net proceeds of c.R500 million will be used to de-gear PPC’s South African balance sheet. In terms of the capital restructuring project, PPC’s South African lenders agreed to review the need for a Group capital raise of a minimum amount of R750 million if the South African businesses continue to de-gear towards a sustainable debt metric of around 2x EBITDA.
Roland van Wijnen, CEO of PPC sais, “This divestment from our lime assets, which we consider non-core to our business, is timely and plays a vital role in our capital restructuring strategy to reduce our South African debt. This willsupport the South African business to reach a sustainable debt to EBITDA position which the South African lenders view as being necessary to remove the need for the originally contemplated rights issue at Group level. With the announcement of this divestment, we have completed another commitment in line with our communicated restructuring plan. Equally important, we consider Kgatelopele Lime to be well-placed to continue to develop and strengthen the position of the lime business in South Africa.”
Kgatelopele Lime’s representative companies collectively have significant experience in miningrelated operations and investments, and in particular, the global trading, mining, marketing and financing of a wide variety of bulk commodities related to the iron and steel sector. By acquiring PPC Lime, Kgatelopele Lime aims to continue to be a responsible custodian of this asset, just as PPC has been for almost 70 years, and ensure the operations can continue for many more decades to come.
“We are excited to be part of the consortium acquiring this foundational asset from PPC. We understand its importance to the region, the country and its customers; and will ensure it continues to be mined responsibly and for the benefit of all stakeholders. Commodities like this will continue to remain essential to ensuring global growth and the development of societies around the world. We are excited to have been afforded the opportunity to acquire a long established and efficient mining operation, that will continue to provide this essential resource for years to come,” said Anirudh Misra, Chairman of IMR on behalf of Kgatelopele Lime.
Post the conclusion of the divestment, PPC Lime is expected to be 39% black-owned, being 29% owned by strategic BEE investors, 5% owned by relevant PPC Lime employees and 5% owned by host communities of PPC Lime, in accordance with the requirements of the Mining Charter.
In terms of the agreement, the rights, benefits and advantages of PPC Lime transfer to Kgatelopele Lime on 1 April 2021. The divestment is expected to reach a close by the end of this year subject to a number of conditions precedent that are usual for a transaction of this nature, including approval by the Department of Mineral Resources and Energy and the Competition Commission.