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Omnia Holdings to undertake R2bn rights offer

In a bid to cut debt.

South Africa‘s chemicals and fertiliser maker Omnia Holdings said on Thursday it would undertake a rights offer of R2 billion ($137 million) to cut debt, sending its shares down more than 13%.

Omnia, which raised funds for two acquisitions and the construction of a new fertiliser plant, said last month it had agreed to restructuring talks with creditors.

These talks were ongoing but it would issue the shares to reduce its debt levels, it said.

“Omnia has determined that it is prudent to reduce its overall gearing. To achieve this, Omnia intends to undertake a rights offer to its shareholders of R2 billion,” the firm said in a statement.

Shares in Omnia fell 13.29% to R46.00 by 1442 GMT after the announcement.

“The market doesn’t like what it is seeing. It’s a sizeable issue, they’re going to dilute,” said Independent Securities trader Ryan Woods.

The firm, which also produces explosives, had a market capitalisation of R3.65 billion as of May 30.

In March, Omnia warned that its full-year basic earnings could plummet by as much as 160% after a spike in debt. Its earnings were also hit by poor market conditions in Zimbabwe.

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