South Africa’s biggest cement maker PPC Ltd will expand more slowly after spending on several cross-border projects jacked up its debt load, its chief executive said on Wednesday.
PPC is building plants in African countries, including Ethiopia and the DRC, as part of a plan to generate 40% of its sales outside its home market by 2017.
But spending on these projects is pushing up its debt levels and CEO Darryll Castle said PPC’s debt would likely hit as much as 12 billion rand ($982 million) in the next two years and possibly breach agreed covenants with banks.
“We wouldn’t want to stretch our balance too much. The focus currently is on existing projects,” Castle told reporters.
Castle also said his firm was in talks with banks about changing the agreed debt covenants to reflect the fact that some of the debt was ring-fenced from the South African balance sheet.
PPC borrowings totalled 6 billion rand by the end of September last year, putting its net debt to EBTDA, or core profit, at 2.4 times – slightly below the agreed level of 3 times with lenders.
