Sephaku Cement gets funding deal valued at R1,95 billion

JSE-listed industrial minerals exploration and development company Sephaku Holdings said its subsidiary Sephaku Cement had concluded a R1.95-billion funding deal with Standard Bank and Nedbank.

Sephaku Holdings, on Friday 19th October, announced that its associate, Sephaku Cement (Proprietary) Limited (Sephaku Cement), has concluded a ten year funding deal valued at R1.95 billion with Standard Bank and Nedbank.

The agreement effectively closes the gap in terms of the required capital for Sephaku Cement to be fully prepared for market entry and to become a significant competitor in wholesale and retail cement trade.

Two of the country’s big four banks, Standard Bank and Nedbank, advised by Sasfin Capital, jointly funded the 10-year deal.

Sephaku would benefit from new investment in a depressed market. SA construction companies have taken a severe hit following the collapse of global markets and a slump in domestic demand after the 2010 Soccer World Cup.

This comes as the country is set to embark on a R4-trillion infrastructure programme over the next 15 years. The latest figures for the rollout were announced by President Jacob Zuma on Friday at the Presidential Infrastructure Investment Conference in Sandton, and include linked projects in Southern Africa, as well as estimated private-sector spending.

The massive spending spree is intended to help offset a steep and protracted downturn in South Africa’s building and construction sector, which plunged following the global financial crisis.

The deal would provide Sephaku Cement, which is developing a production facility in the North West and a grinding facility in Mpumalanga.

Aganang, near Lichtenburg, would have an estimated production capacity of 1.2-million tons of cement a year and the Delmas grinding facility would have a capacity of 1.4-million tons of cement a year.

Both facilities were scheduled to be in full production by the end of 2013.

Of the total debt capital raised by Sephaku Cement, just over 50% of total procurement spend will be invested locally.

In addition, the combined plants will create direct employment opportunity for around 400 local people and up to 3,000 jobs indirectly.