Holcim ‘accusing PIC of nationalising AfriSam’
Public Investment Corporation, which manages about R1-trillion in South African state pensions, wants to restructure more than R20bn of AfriSam near-term debt into equity, to keep it from bankrupting the company
The Public Investment Corporation (PIC) says one of the world’s largest cement makers, Swiss-based Holcim, accuses it of trying to nationalise cement producer AfriSam.
The PIC, which manages about R1-trillion in South African state pensions, wants to restructure more than R20bn of AfriSam near-term debt into equity, to prevent it from bankrupting the company.
About 90% of senior noteholders have given the green light to a restructuring, which the PIC says will reduce AfriSam’s debt by about R15bn. This will leave the cement maker with a R6,5bn debt burden.
"We are still working out which of the options is optimal," PIC CEO Elias Masilela said yesterday.
It was unfortunate the nationalisation debate was raging while the PIC was trying to save AfriSam, he said. "I think Holcim is playing on sentiment locally and globally, painting a very negative picture of the South African economy."
He said it was possible that Holcim’s management had "been misrepresenting to their board all along, and now the chickens have come home to roost".
Holcim deputy head of corporate communications Peter Gysel said yesterday the company would not comment on AfriSam, as discussions were still going on.
In 2006, Holcim formed AfriSam by selling 39% of its South African business to black investors, and retained a 15% stake. But the recession badly affected the highly leveraged empowerment deal.
The PIC was exposed to about R10bn of AfriSam debt. But by following through on a court-sanctioned conversion of R4,7bn of senior debt into equity, thereby diluting Holcim’s 15% stake in AfriSam to less than 1%, it exercised its contractual rights.
The conversion will be discussed at an AfriSam shareholder meeting today. If approved, the PIC would control 99,8% of the company. The PIC said it had received confirmation Holcim would not attend.
A German public broadcaster has interviewed Holcim shareholders based in Switzerland. "They are under the impression Holcim is a victim of a ‘nationalisation’ process just called black empowerment … (and) are worried about losses of their capital invested," Uwe Westphal, editor of HR2-Frankfurt, said yesterday.
The PIC said its stakeholder rights in AfriSam had not been commensurate with its exposure to the company. It said Holcim should have impaired about €400m of its debt in AfriSam.
"Holcim has used crude accounting principles which cannot be justified," Mr Masilela said.