The shares of paper and plastics packaging group Nampak fell to their lowest level in nine months on Friday after it announced that a capital raise and asset sale were high on its list of options to pay off its R5bn debt.
The share price dropped 13.15% to 185c on Friday. The last time it was below the R2 mark was in January and it has shed more than 44% since the start of the year.
“Cash proceeds from asset disposals and or proceeds from a capital raise continue to be actively considered as part of addressing the group’s funding structure,” Nampak said in a statement.
The Johannesburg-based group, which is grappling with options to address its capital and funding structure and service its R5bn debt, also announced an extension of the maturity date for its revolving credit and term loan facilities on Friday.
Speaking on a pre-close conference call Nampak CEO Erik Smuts said the group had committed itself to reducing the complexity of its lending structure, simplifying the funding structure and refinancing the maturing debt.
“Sources of funding that are actively being considered in optimising our funding structure include proceeds from asset disposals and or a capital raise,” Smuts said.
Nampak has reached agreements with lenders to extend the maturity date for its revolving credit and term loan facilities from April 1 2023 and September 25 2023 to the end of December 2023.
The firm’s lenders also agreed to keep the ratio of current net debt to earnings before interest, taxes, depreciation and amortisation (ebitda) at 3.5 times until it is lowered to three times from March 31 next year.
“These relaxations will allow time for the group to continue the process of optimising its capital and funding structure,” Nampak said, “while providing the necessary flexibility for the group to operate under conditions with elevated commodity prices and higher interest rates.”
For the 11 months to August, Nampak said it had battled with unprecedented increases in commodity prices. This resulted in elevated working capital levels, which have been funded by a combination of internally generated cash and existing borrowing facilities.
The company said despite certain commodity prices beginning to ease towards the end of the fourth quarter of the 2022 financial year, higher shipping costs, global supply chain disruptions and the geopolitical risk of the Russian-Ukrainian war remained. This, coupled with the weakening of the rand, contributed to a delay in the anticipated release of net working capital, with benefits expected to flow only during full-year 2023.
Smuts said it was pleasing that the overall trading conditions in the group’s key markets remained healthy, adding that demand for aluminium cans in SA exceeded supply.
The diversified packager recently announced that the board had appointed PwC as its external auditor with effect from October 1 2023.
Nampak’s annual results for the year ending September 30 are expected on December 5.
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