South African Rand/Bloomberg
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.