SOUTH AFRICA – JSE-listed packaging group Nampak has successfully concluded credit-approved term sheets with revolving credit facility and term loan lenders.
The revised debt structure will comprise core and noncore debt at Nampak Products of R5 billion and Nampak International of R286-million and US$34.6 million.
The debt overhang of R1.9 billion, primarily associated with legacy expansion activities in Angola and Nigeria, will be housed in a new Intermediate Holding Company, which will be interposed between Nampak and both Nampak Products and Nampak International.
“Nampak is of the view that the debt restructure is a suitable enabler to the restructuring and turnaround plan that is underway,” the company said in a trading statement.
The revised debt structure will provide a simplified lender structure on the implementation date, and proceeds from the R1-billion rights offer will be used to repay debt on the implementation date.
In addition, the revised debt structure will reduce dollar-based financing to minimize exchange rate exposure with a clear path to redeem the US private placement noteholders debt of US$24.6 million, after the application of a proportion of the rights offer proceeds, within the next 18 months, the company said.
Additionally, the revised debt structure will also provide a borrowing-base facility of R2.58-billion at Nampak Products and a revolving credit facility of US$10 million at Nampak International.
This will provide flexible working capital financing secured through Nampak’s high-quality debtors book and inventory.
The revised debt structure has also garnered strong support from the big four South African banks, including a commitment to finance Nampak in the long term, underpinned by its turnaround strategy, the company added.
Nampak’s turnaround strategy is predicated on, among others, a clear strategy to direct its focus onto its core Metals business, namely Bevcan SA, Bevcan Angola and Divfood.
The strategy will result in the disposal of several assets over the next 18 months under its asset disposal plan, which is aimed at raising about R2.6 billion.
Additionally, the strategy will see the reduction of leverage, targeting a more sustainable net debt to earnings before interest, taxes, depreciation and amortization ratio of below three times for the 2024 financial year, with this ratio expected to improve post the receipt of the proceeds from the asset disposal plan to below two times by September 30, 2025, with further improvements thereafter from internally generated cash.
Other key initiatives involved in the turnaround strategy include the right-sizing costs and unearthing inefficiencies, revenue growth management, optimized working capital, and the merging of Bevcan of Divfood.
CEO appointment
Further, as part of the group’s turnaround strategy, the board has appointed Phildon Roux as CEO, with effect from September 1, after having served as interim CEO since April.
Roux has 32 years’ experience in the fast-moving consumer goods sector, having held numerous executive positions inclusive of CEO, executive and non-executive director.
He has previously held board positions as an executive and non-executive director at Pioneer, Tiger Brands, Oceana, Sea Harvest, Dairybelle, Langeberg and Ashton Foods and as chairperson of Tiauto.
Additionally, as the CEO of Adcorp, he was instrumental in the turnaround of the organization.
Roux will be supported by Nampak CFO Glenn Fullerton, who has held the position for the past eight years, and by Nampak chief restructuring officer Michael Dorn, as well as the company’s newly appointed executive team.
For all the latest packaging and printing industry news from Africa and the World, subscribe to our NEWSLETTER, follow us on Twitter and LinkedIn, like us on Facebook, and subscribe to our YouTube channel.
