Shoprite to use funds to cut debt
Business Day - Mar 26th 2012, 09:25
Shprite Holdings , Africa’s largest food retailer, plans to use a substantial portion of the R8bn it is raising in a sale of stock and convertible bonds to repay debt.
The company would use R2,5bn-R3bn on reducing debt facilities, Carel Goosen, the deputy MD of Cape Town-based Shoprite, said on Friday.
A further R1,5bn will be spent on enlarging Shoprite’s distribution centres in SA.
Shoprite plans to build facilities in the Western Cape once it has completed the distribution centre it is already building in KwaZulu-Natal. Shoprite said it may initially invest R500m in property in Nigeria.
While Shoprite does not intend to be a long-term holder of property in Nigeria, it may invest as much as R1,5bn over three years, Mr Goosen said.
The remainder would be set aside for potential acquisitions in "less developed retail markets", the director said.
"In SA, I don’t think that the Competition Commission would allow us to make a big acquisition," he said. "In the rest of Africa there is very little that is large for us to buy."
Shoprite was pricing the 27,1-million new ordinary shares, representing 5% of the stock outstanding, at R127,50 apiece, Morgan Stanley said in a statement on Friday.
The convertible bonds maturing in 2017 will have a semiannual coupon of 6,5% and convert to equity when the stock reaches R168,94, or 33% more than the price set in the share sale.
Shoprite fell as much as 0,9% in Johannesburg on Friday. It closed 0,5% lower at R129,50.
Goldman Sachs, Morgan Stanley and FirstRand Bank’s Rand Merchant Bank division are managing the transaction.
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