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Update on the review of the CEMENT loan repayment profile and correction to the Notice of Annual General Meeting
Sephaku Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2005/003306/06)
Share code: SEP
ISIN: ZAE000138459
(“SepHold” or “the company”)
Update on the review of the CEMENT loan repayment profile and correction to the Notice of
Annual General Meeting
Lenders review the repayment profile to alleviate pressure on the debt service cover ratio
SepHold is pleased to announce that, the loan repayment profile of the Dangote Cement SA Proprietary
Limited (“CEMENT”) project loan (“the Project Loan”) has been reviewed by CEMENT’s lenders to
eliminate pressure on the debt service ratio covenant. The review has been agreed in principle and the
amendments will be effective when an equity injection totalling R95 million has been received by
CEMENT from the shareholders within the next three weeks.
Background and original repayment profile
The Project Loan of R1.95 billion had a tenor of 10 years from 1 November 2012 with a 36-month
payment holiday and with the loan capital being repayable in 28 equal quarterly instalments. The Project
Loan attracted an interest rate equal to the 3-month JIBAR rate plus a margin of 400 basis points (“bps”)
and accrued interest during the payment holiday was capitalised against the Project Loan to a final debt
amount of R2.4 billion. Debt covenants included a loan life cover ratio of greater than or equal to 1.5;
a debt service cover ratio of greater than or equal to 1.3; a reserve tail ratio greater than or equal to
30% and a gearing ratio of less than or equal to 75:25.
Project Loan repayments to date
Since CEMENT started the capital repayments in the first quarter of 2016, a total of R600 million, which
constitutes 25% of the capital amount, has been repaid to date. The highly competitive market and
downward pressure on cement pricing during CEMENT’s financial year ended 31 December 2016,
resulted in the debt service cover ratio being increasingly under pressure. The debt service cover ratio
for the financial year ended 31 December 2016 was 1.23 instead of the requisite 1.30, resulting in a
R135 million equity injection by the shareholders, SepHold and Dangote Cement Plc (“DCP”). The
lenders agreed to condone this breach and the forecast breaches for the measurement periods ending
30 June 2017, 31 December 2017 and 30 June 2018.
Revised payment profile
The lenders consortium has collectively agreed to change the repayment profile of the remaining R1.8
billion on the Project Loan from equal capital instalments to increasing capital amounts over the next
five years. The annual instalments as a proportion of the outstanding debt would amount to
approximately 10% in 2018; 15% in 2019 and the balance of 75% over the final three years. The
covenants have been maintained at the original levels, but the interest rate has been increased by 50
bps to JIBAR plus 450 bps.
Requisite contribution from shareholders
A capital injection of R95 million required, will be settled in full by DCP within the next three weeks in
line with the terms of the relationship agreement between SepHold and DCP. Subsequently, SepHold
will be required to make a payment of R34.2m at a future date, still to be determined between SepHold
and DCP, to avoid the dilution of SepHold’s 36% interest in CEMENT. In the event that the contribution
is not made and based on the valuation used for the last subscription, SepHold’s interest in CEMENT
will decrease to just below 35%.
Correction of the profit before tax figure disclosed in the Notice of Annual General Meeting
Shareholders are referred to the SENS announcement, dated 23 August 2017, which advised of the
distribution and availability of the Notice of Annual General Meeting (“Notice”) and are advised that the
profit before taxation figure, contained in Annexure 1 of that Notice, was incorrectly stated as
R 890 030 675 and should have been R 90 030 675. This amount was correctly reported in the annual
financial statements, annual review and the provisional results released on SENS on 30 June 2017.
Chief Executive Officer
Dr. Lelau Mohuba
18 September 2017
_______________________________________________________________________________
Enquiries contact: Sakhile Ndlovu Sephaku Holdings Investor Relations 012 612 0210
Sponsor to Sephaku Holdings: Questco Corporate Advisory (Pty) Ltd
About Sephaku Holdings Limited
Sephaku Holdings Limited is a building and construction materials company with a portfolio of investments in the cement and
mixed concrete sectors in South Africa. The company’s core investments are a 36% stake in Dangote Cement South Africa (Pty)
Ltd and 100% in Métier Mixed Concrete (Pty) Ltd. SepHold’s strategy is to generate income and realise value for shareholders
through the production of cement and ready mixed concrete in Southern Africa.
www.sephakuholdings.com
About Dangote Cement South Africa Proprietary Limited (“CEMENT or the associate”)
CEMENT specialises in manufacturing, marketing and distributing high-quality cementitious products to a broad range of users.
Its integrated cement plant in Aganang and grinding plant in Delmas have a combined production capacity of 2,8 million tonnes
per annum (mtpa) (Delmas 1,5 mtpa and Aganang 1,3 mtpa). Its bagged products are well known and are available at major
hardware retailers and numerous second-tier distributors. The associate has been increasing its sales volumes among bulk
cement users, particularly ready-mix concrete manufacturers.
CEMENT operates at steady-state production capacity and supplies primarily to Gauteng, Limpopo, Mpumalanga, North West
and northern KwaZulu-Natal markets. In the 2016 financial year, approximately 80% (2015: 80%) of sales volumes were in
bagged cement. Gauteng continues to be the largest and most contested inland market.
Overall, 64% of CEMENT is owned by DCP, a Nigerian Stock Exchange-listed company with projects and operations in Nigeria
and 14 other African countries. Refer to www.dangcem.com for further information on DCP.
www.sephakucement.co.za
Date: 18/09/2017 04:29:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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