SOUTH AFRICA – Durban-based packaging company, Nampak has informed its shareholders that the JSE had approved its R1 billion (US$52.19m) proposed rights offer.

In a statement, the debt-laden group said all suspensive conditions to the Rights Offer had now been fulfilled.

The group sought the right offer in a bid to embark on its turnaround strategy, which involves the transformation of workstreams, right-sizing initiatives and the asset disposal program. The offer would be through the issue of new Nampak shares at R175 each.

“The subscription price of R175.00 represents a discount of approximately 23.49% to the 30-day volume weighted average traded price of Nampak’s ordinary shares as at close of business on Wednesday, August 30, 2023,” it said.

Nampak said it had received commitments from certain of its major shareholders, to follow their rights in terms of the rights offer and subscribe for rights offer shares to the value of approximately R500 million (US$26.10m).

“Nampak has furthermore received commitments from Coronation Asset Management up to a maximum of R300m (US$15.66m), A2 Investment Partners (Pty) Limited up to a maximum of R100m (US$5.22m), and Numus Capital (Pty) Limited up to a maximum of R50m (US$2.61m),” it said.

According to the group, there has been a step change in corporate activity since presenting the interim results.

Numerous concurrent workstreams to reposition, refinance and right-size the business have either been finalized or are at advanced stages of implementation.

“Good progress has been made in respect of the asset disposal program, and we remain confident that the R2.6 billion (US$135.70m) target will be realized, with a critical focus on high-value assets,” added the company in a statement.

The group said the merger of Bevcan South Africa and DivFood was progressing according to plan, having appointed the leadership team in pursuance of best practices.

“DivFood has delivered a return to profitability over the past four months which is particularly pleasing as turnaround initiatives gain traction.

“Management initiatives to reduce working capital through renegotiated terms and reduced inventory levels are yielding positive results. Capital expenditure is being actively managed and is expected to be in line with previous guidance,” Nampak said.

According to Nampak, following the sustained currency volatility within Nigeria and, to a lesser extent, Angola, management has implemented mechanisms to mitigate the severity thereof.

The rights offer comes at the time the biggest packaging manufacturer on the continent is struggling to deal with debt of R1.94 billion (US$101.25m) – primarily associated with legacy expansion activities in Angola and Nigeria.

Earlier this month, Nampak said negotiations for a favorable financing package with lenders about the group’s revolving credit facility and term loan facilities, as well as with its US Private Placement Noteholders (USPP), had been successfully concluded.

The group said in terms of the refinancing package, proceeds from the rights offer would be used to repay debt.

According to the group, the refinancing also included a borrowing-base facility of R2.58 billion (US$134.65m) and a revolving credit facility of US$10 million (R188m) to provide flexible working capital financing, secured through Nampak’s debtors book and inventory.

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