Cement maker PPC Zimbabwe has confirmed receipt of $ 11.2 million from the Reserve Bank of Zimbabwe under the Old Debt Repayment Facility.
The debt arose due to cash flows generated in Zimbabwe by foreign companies that could not be returned to foreign suppliers due to foreign exchange constraints.
These old foreign debts, which were assumed by the central bank in accordance with Circular 8 of 2019, cover the period between January 2016 and February 2019.
In 2019, the central bank asked all those whose blocked funds were approved to transfer their respective national currency to the central bank via normal bank channels by April 30, 2020.
Roland van Wijnen, Chief Executive Officer of the PPC Africa Group, confirmed the development and expressed his optimism that the debts will be settled by the end of next year.
“The Reserve Bank of Zimbabwe is meeting its obligation to pay off the debts of PPC Zimbabwe from legacy funds with an additional $ 11.2 million in FY21.
When the funds were frozen, PPC Zimbabwe Ltd had an old debt of $ 21 million to PPC South Africa.
The local entity remained stuck with the equivalent of $ 64.2 million owed to its parent company after failing to transfer rights issue proceeds and other amounts to the Johannesburg Stock Exchange-listed building materials group.
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Since then, several companies have confirmed the central bank’s compliance with the promised commitment.
During the group’s fiscal year ending March 31, 2021, PPC Zimbabwe’s cement volumes increased by approximately 10%, supported by ongoing infrastructure projects.
In functional currency terms, PPC Zimbabwe’s revenue grew 251%, with the company remaining financially self-sufficient and paying a cash dividend of $ 4.4 million to its parent company as of December 2020.
After year-end, another dividend of $ 2.6 million was paid to the parent company.
The Group reported a net fair value gain on financial assets in Zimbabwe of R 256 million and a net fair value loss on locked funds in Zimbabwe of R 17 million.
PPC said cash available from operations was R 1,022 million, while cash generation benefited from improvements in EBITDA, a reduction in working capital raising and lower financing costs.