Sappi, the world’s largest maker of fibres made from wood pulp, says it is selling €250m (about R5bn) of senior five-year notes to shore up its balance sheet.
A senior note is a type of bond that takes precedence over other debt in the event that the company declares bankruptcy and is forced into liquidation.
Sappi reported a hefty 97% slump in quarterly profit to end-March earlier in May, and said then that it was cutting capital expenditure amid a fall off in new contracts.
The group said at the time that liquidity headroom within Sappi was strong, with cash deposits at the end of the quarter of $268m (about R7.7bn), and two, undrawn revolving credit facilities of about $642m.
As of the end of March the group had net debt of some $1.88bn, while its market capitalisation stood at R12.4bn on Thursday afternoon.
In afternoon trade on Thursday, Sappi’s share price was down 3.19% to R22.74, having fallen 47.93% so far in 2020.
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