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South Africa’s Edcon secures repayment deal on debt of 7.9 bil rand

30 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Bain Capital’s Edcon, a South African retailer, said on Monday it had secured a repayment deal on debt of 7.9 billion rand ($548 million) and access 1.85 billion rand to pay down some bonds.

The company, which is the biggest fashion retailer in Africa’s most advanced economy, completed a distressed exchange offer in July and has since issued new bonds to restructure its debt.

“The deal represents a strong statement of support from Edcon Group’s existing South African and international lenders under its revolving and term loan facilities, as well as new lenders into the capital structure,” Edcon said in a statement.

The company has also secured new commitments for a facility of 1.85 billion rand which it will use to pay down 1.0 billion rand in secured notes due in 2016 and to settle a 1.0 billion rand liquidity facility from Goldman Sachs, chief financial officer Toon Clerckx told Reuters.

Taken private by Bain in 2007 in a highly leveraged buy-out, Edcon has lost market share to other retailers as it struggled to pay its debts in a slowing economy.

Before refinancing its debt, it said it was considering selling non-core assets, but on Monday poured cold water on the idea. “There is no need to sell, you go to the market when you get the price you want or you trade your way out of it,” Clerckx said.

Most of South Africa’s largest banks hold part of the 7.9 billion rand in debt Edcon has now refinanced, he said.

Edcon said in July debt that restructuring attempts would decrease its interest payment obligations by more than 1 billion rand a year.

The retailer said on Monday its refinancing efforts of this year will lower its debt by around 4.5 billion rand.

The operator of clothing retailers Edgars and Jet, stationer CNA and homeware store Boardmans also said it had finished the final stage of the exchange offer lanched in June for a 2019 bond.

($1 = 14.4205 rand)

 

(Reporting by Zandi Shabalala and TJ Strydom; Editing by Tom Heneghan)

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Sibanye Gold says to conclude platinum acquisitions, shrugs off lower prices

30 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Sibanye Gold said on Monday it remained committed to concluding the acquisition of two platinum assets despite lower prices as it awaited the approval of shareholders and South Africa’s anti-trust authorities.

The bullion producer said it expected a decision from the South African Competition Commission in March 2016 while shareholders are set to vote in January on the acquisition of Aquarius Platinum and Anglo American Platinum’s Rustenburg mine.

Platinum prices sank 16 percent in November to near seven-year lows on prospects of a U.S interest rate hike and ongoing concerns of oversupply. Despite this Sibanye said it would go ahead with the transactions.

“As highlighted when these transactions were announced, whilst near-term economic headwinds and supply side factors have resulted in downward pressure on metal prices, the long-term outlook for PGM demand remains constructive,” Chief Executive Neal Froneman said.

 

(Reporting by Zandi Shabalala; Editing by Himani Sarkar)

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South African rand steadies but looming U.S. rate hike poses risk

25 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand was largely unchanged against the dollar in early Wednesday trade but analysts said the short-term prognosis was for the currency to weaken as U.S. interest rates look set to rise.

The JSE securities exchange’s Top-40 futures index was up 0.6 percent, indicating the actual index would open 265 points higher.

At 0648 GMT the rand traded at 14.0250 versus the dollar, barely moved from Tuesday’s New York close at 14.0370.

The rand was aided by broad-based dollar losses as investors cut crowded long positions in the lead-up to the U.S. Thanksgiving holidays.

“The rand will continue to be vulnerable for further depreciation as we approach the start of U.S. monetary policy normalisation – widely expected to happen in mid-December,” NKC African Economics said in a note.

“Higher local interest rates will not remedy this situation as the rand remains at the mercy of broader emerging market sentiment.”

The rand has given up most of last week’s gains after pushing to 2-1/2 week highs following a surprise 25 basis point hike in rates by the South African Reserve Bank.

Government bonds edged higher on Wednesday, and the yield for benchmark debt due in 2026 dipped 2 basis points to 8.43 percent.

 

(Reporting by Stella Mapenzauswa; Editing by Ed Cropley)

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South Africa’s Netcare FY profit up 10%, lags consensus

23 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s second-largest private hospital firm Netcare missed estimates with a 10 percent increase in full-year profit on Monday as weaker demand in the United Kingdom offset a strong showing at home.

Netcare, which runs Britain’s largest private hospital network, BMI Healthcare, said diluted headline EPS totalled 170 cents in the year to the end of September, below a 190 cent-estimate in a Reuters poll of 10 analysts.

While demand for private healthcare is increasing in South Africa thanks to a fast-growing middle class, tentative economic growth in the United Kingdom has led to a drop in the number of Britons with private medical insurance.

Netcare said sales rose 6.1 percent to 33.7 billion rand ($2.41 billion).

 

(Reporting by Tiisetso Motsoeneng; Editing by Sunil Nair, Reuters)

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Lonmin shareholders provisionally approve crucial rights issue

19 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

LONDON (Reuters) – Lonmin shareholders provisionally approved the company’s deeply discounted $407 million share issue on Thursday, its chairman said, as the beleaguered platinum producer seeks cash to stay afloat.

Battered by strikes, rising costs and weak platinum prices, South Africa-focused Lonmin said last month it also planned to raise another $370 million in loans to refinance debt currently due in May 2016.

The final results of the votes will be announced later on Thursday, Chairman Brian Beamish said after the shareholder meeting in London.

The loss-making platinum producer had asked its shareholders to vote on five proposals, including consolidation of Lonmin shares. Shareholders also provisionally authorised its directors to allot new shares.

Lonmin shares have plunged more than 90 percent this year and the company has written down $1.8 billion off the value of its assets.

The scale of Lonmin’s plight was illustrated on Nov. 9 when it priced its rights issue at just 1 pence a share – a huge discount to the stock’s previous session closing price of 16.25 pence on the London Stock Exchange.

That meant investors would have to buy 46 new shares for every one they already hold, just to retain their current stake in percentage terms.

Analysts said the low price was a strategy to force shareholders to take up their entitlement or risk having their investment in the company heavily diluted.

Lonmin had warned that if it doesn’t raise the cash it needs, its shares could be suspended.

“We had no choice but to vote in favour because we will be wiped out if this doesn’t go through. But does that mean we will be with the company in the next 10 or even two years? We don’t know,” Anthony Guildford, a Lonmin investor since 1969, said.

Some investors, including pensioners, raised concerns about the consolidation of shares.

“There had to be a better idea than consolidation. I will never see my money (14,500 pounds in shares) back at 6 pounds where I bought … They were 1.70 last Christmas!,” one investor said.

Lonmin’s London-listed shares were down nearly 5 percent at 9.74 pence by 1127 GMT.

The company has said its share sale has been fully underwritten.

South Africa’s Public Investment Corporation (PIC), which owns about 7 percent of the company, has committed to buying its full entitlement and has sub-underwritten a material portion of the issue, over and above its entitlement, Lonmin said.

Lonmin still has to convince the wider market it can be a viable business with platinum prices near seven-year lows below $850 an ounce, hobbled by slowing demand in top consumer China and as the Volkswagen’s emissions-cheating scandal weighs on platinum market sentiment.

The metal used in emissions-capping diesel auto catalysts and jewellery is on track for a 30 percent decline this year, its third consecutive annual fall.

This would be Lonmin’s third rights issue in six years after it asked for cash from shareholders in 2009 and 2012 to shore up its balance sheet.

Lonmin was hit hard last year by a five-month strike in South Africa’s platinum belt – the country’s longest and costliest – because, unlike peers such as Impala Platinum and Anglo American Platinum, almost all its operations were in the strike-affected area.

(Writing by Olivia Kumwenda-Mtambo; Editing by Veronica Brown and Susan Fenton. By Atul Prakash and Clara Denina. Reuters)

 

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South Africa’s Barclays Africa keeps credit taps open for drought-hit farmers

18 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Barclays Africa will keep lending taps open for South African farmers despite the worst drought in decades as growers can use high crop prices to offset lower output, the head of the lender’s agribusiness said on Wednesday.

The Johannesburg-listed bank, which funds farmers, is not concerned as yet despite the severity of the drought, Ernst Janovsky told reporters in Pretoria, adding that less than 0.2 percent of growers are defaulting on loans.

“There is still enough money around to survive the drought. We haven’t closed any taps. There is no real problem up to now,” he said.

While the weather slashed output. farmers can sell their crops at a higher price, Janovsky said, but warned that if substantial rains do not fall by March next year there could be a “serious problem”.

A combination of El Nino and drought conditions have hit production of soft commodities from sugar to maize in Africa’s most advanced economy, even forcing farmers to cull cattle due to lack of grazing grass.

Dry conditions last year cut South Africa’s staple maize crop by a third and the prospect of another drought pushed prices in July for white maize, the staple crop for the region,

to near record highs.

The South African Weather Service said last month that an El Nino weather system, which was already forecast to bring drought conditions for much of the southern hemisphere’s summer, now looks like it will extend into autumn next year.

 

(Reporting by Zandi Shabalala; Editing by Adrian Croft, Reuters)

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South Africa’s RBPlat delays ramp up of Styldrift mine due to low prices

17 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s Royal Bafokeng Platinum will delay the ramp up of its new mine by a year as commodity prices sink to near seven-year lows, the company said on Tuesday.

The mid-tier producer now aims to fully ramp up production at the Styldrift project in the first quarter of 2020, compared with a previous plan for the first quarter of 2019, it said in a statement.

“Delaying the start of stoping at Styldrift I ensures that value is not destroyed by ramping up high quality Merensky ounces into a depressed market but that instead the business is well positioned to begin ramp-up when the market improves,” Bafokeng said.

Styldrift, with an estimated lifespan of more than 60 years, is a high grade, shallow mechanised mine in the North West province, about 100 km (62 miles) from Johannesburg.

Drilling at Styldrift could be further delayed from the first quarter of 2017 – after being pushed back from the third quarter of this year – if prices sink further, Bafokeng said.

The company had spent 5.19 billion rand ($361 million) by the end September on developing Styldrift, which is still expected to produce 2.76 million tonnes per year.

Spot platinum has recovered from seven-year lows of $851 hit on Friday on concerns about oversupply and slowing demand in top consumer China, but is still at levels last seen in 2008.

In the third quarter, Bafokeng cut its capital expenditure at Styldrift by 32 percent compared to the previous quarter on lower platinum prices while also slashing other “non-critical” spending.

Shares edged up 0.25 percent to 23.73 rand outpaced by the 1.17 percent rise in Johannesburg’s All-Share index.

 

(Reporting by Zandi Shabalala; Editing by Mark Potter, Reuters)

 

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BMW to invest $417 mil to make X3 model in South Africa plant

17 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – BMW’s South African unit plans to invest 6 billion rand ($418 million) at its plant in the capital Pretoria where the German carmaker would manufacture its new X3 model for export and local sale.

The X3 is one of the most successful model ranges for BMW, the world’s biggest luxury carmaker, representing 28 percent of total global sales, the local unit of the global car maker said.

BMW said 2015 production at its Rosslyn plant in Pretoria is expected to reach 70,000 units.

“The production of the next generation BMW X3 at Plant Rosslyn will replace the BMW 3 Series Sedan, which will now be allocated to other plants within the global BMW production network,” the car maker’s local said in a statement.

BMW’s South Carolina plant in Spartanburg will continue producing the carmaker’s new version of the X3 and the X7.

 

(Reporting by Zandi Shabalala; Editing by James Macharia, Reuters)

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Eskom applies to regulator to recover $1.6 bil via tariffs

12 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

CAPE TOWN (Reuters) – South African utility Eskom has asked the energy regulator to allow it to recover $1.6 billion in costs from 2013/14 when it ran expensive diesel plants and brought more green power to keep the lights on.

The regulator (NERSA) in Africa’s most advanced economy in June rejected a request from cash-strapped Eskom to raise tariffs and the utility said it would seek alternative ways of funding.

Eskom’s spokesman Khulu Phasiwe said the utility was over budget as it had to buy an extra 1,800 megawatts of green energy and used more diesel to run its expensive plants in 2013/14.

The regulator said it was assessing Eskom’s request and did not say when it would publish its outcome.

“Should the results of the assessment indicate that Eskom has to reimburse the customers then the price of electricity would have to decrease. Similarly, if the customers have to reimburse Eskom the price would have to increase,” National Energy Regulator spokesman Charles Hlebela said.

Eskom, which provides virtually all of South Africa’s electricity, is scrambling to repair its ageing power plants and grid. Earlier this year, the utility was forced to impose almost daily power cuts that hurt economic growth.

Eskom said last week, however, that it does not expect to implement electricity blackouts until April 2016.

The energy regulator could grant Eskom the full 22.8 billion rand ($1.6 billion) it wants to recover, or a portion thereof, with customers ultimately bearing the cost.

Independent energy analyst Ted Blom said if the full increase was granted, consumers could expect to pay between 11 and 15 cents extra per kilowatt/hour for electricity.

 

(Reporting by Wendell Roelf and Peroshni Govender; editing by David Clarke, Reuters)

 

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South African drought to cost Sappi up to $10 mil

12 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – A drought in South Africa could cost paper maker Sappi between $5 million and $10 million in the first quarter of 2016 as it would result in slower production in its mills, chief executive Steve Binnie said on Thursday.

The drought – the worst in over a century in the eastern KwaZulu Natal province where Sappi has some mills – will negatively impact profits but Binnie told Reuters the first quarter of next year would still show improvement compared with the first three months of this year.

 

(Reporting by Zandi Shabalala; Editing by James Macharia, Reuters)

 

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