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South Africa’s Omnia in talks to reorganise debt as finance costs increase

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The company’s management is in negotiations with seven banks to consider options to address its cash needs.

Sunday 21, April 2019

(Bloomberg) --Omnia Holdings is seeking to restructure loans after a series of acquisitions caused the South African chemicals and fertiliser maker’s debt to surge.

Omnia may have to do a rights issue or convert some of the debt into equity. The company declined to comment on market speculation, saying it is in a closed period while preparing its annual financial statements.

Omnia’s interest-bearing borrowings almost doubled in the six months through September compared with a year earlier after the Johannesburg-based company replaced the cash it used to fund acquisitions with bank debt. It also used the loans for additional working capital to fund higher pre-season fertiliser-inventory levels, resulting in a more than twofold increase in financing costs.

The firm last month forecast it will post a full-year loss of at least ZAR 400 million rand ($28 million) following the jump in its debt levels and a number of one-off items, including an impairment in Angola, the restructuring of its Protea Chemicals unit, provisions for losses at its Emerging Farmers programme due to drought and a slowdown at its Zimbabwean business.

Its mining unit continued to experience volume and margin pressure, while the tepid South African economy, increased competition and late plantings hit fertiliser sales.

 

TAGS : Omnia Holdings, Protea Chemicals, mergers and acquisition

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