OMNIA: 3,302 +27 (+0.82%)
S.Africa's Omnia to evaluate businesses as thin margins, high debt weigh
* Omnia to evaluate its businesses, cut costs
* Secures $474 million bridge facility to cover debt
* Posts FY loss on mix of negative drivers
(Recasts with cost cutting, adds quotes)
By Tanisha Heiberg
JOHANNESBURG, June 25 (Reuters) - South African chemicals
and fertiliser maker Omnia Holdings said on Tuesday it
will evaluate the returns from its business units and look at
cost cutting as it battles high debt and thin margins squeezed
by difficult trading conditions.
A slowdown in the manufacturing and mining sectors and
drought conditions have weighed on Omnia's business, which
produces various chemicals and industrial products, fertilisers
"You can see the pressure on our customers are being put on
us in terms of margins. So it is very important for us to make
sure our input costs and our operating costs are inline with the
current market conditions and that is what we are focusing on in
the next two years," Group Managing Director Adriaan De Lange
Omnia, which last year embarked on cost cutting at its
struggling chemical producing unit, said it will evaluate the
return on capital from all its businesses and product lines but
had no immediate plans to sell assets.
"Those product lines or businesses that do not contribute
positively ... we will either fix or we will get out of those
businesses," De Lange said.
The company reported a headline loss per share of 112 cents
for the year ended March 31, against a profit of 991 cents a
year earlier, hurt by a volatile currency, drought, changes in
the mining industry and difficult global trading conditions.
Omnia has been battling high debt after raising funds for
two acquisitions and a fertiliser plant construction with net
interest-bearing borrowings at end March of 4.403 billion rand
The firm, which has been in debt restructuring talks with
its creditors, said it had secured a 12-month 6.8 billion rand
bridge facility from its principal lenders in a bid to settle
all existing borrowings and overdraft facilities, as of June 24
"Traditionally, Omnia has been a relatively unleveraged
business, but it now finds itself with a significant amount of
debt during very challenging economic times. This debt has to be
unwound responsibly in order to stabilise operations," Group
Financial Director, Seelan Gobalsamy, said in a statement.
The company also plans to undertake a rights offer of 2
billion rand in a bid to cut debt.
"The rights offer will reduce the debt levels to within the
group's targeted range, thereby, affording the group access to
undrawn facilities and reducing its cost of capital," it said.
($1 = 14.3007 rand)
(Reporting by Tanisha Heiberg, Editing by Sherry Jacob-Phillips
and David Evans)
First Published: 2019-06-25 08:17:53
Updated 2019-06-25 15:01:09
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