Debt-laden consumer goods packaging company Nampak is further lowering the value of its rights offer to R1 billion after reducing it from an initial R2 billion earlier this year.

The company initially proposed the rights offer seeking to settle at least R1.3 billion in debt, the minimum required by its lenders. It also sought additional capital to fund growth and working capital flexibility around expanding its beverage line.

But the rights offer did not receive shareholder backing, with investors bemoaning its size.

On Wednesday, the company, with a R455 million market cap, reported its half-year results to the end of March 2023, which showed that it had successfully renegotiated its debt maturity dates with lenders, resulting in an extension to 30 June 2024.

The extension has relieved and improved the company’s balance sheet, Phil Roux, Nampak’s acting CEO, said.

Roux said discussions were underway with Nampak’s advisors and lenders regarding the company’s revised five-year funding package, which will include asset disposal plans and make way for the launch of a more appropriately sized rights offer.

“The requirement for a rights offer of R1.5 billion has been reduced to a maximum of R1 billion,” he said.

The group, whose foray into Africa has faced various challenges, said earlier this year that it had commenced divestment from assets or businesses in the rest of Africa that were either rendered unprofitable or subscale, namely its East African businesses and General Metals in Nigeria. Proceeds from the disposal of these operations were earmarked for debt pile reduction and the funding of turnaround plans and other capital expenditure.

Roux conceded the company’s debt pile is unsustainable, adding that a rigorous cost reduction programme and business remodelling will be fundamental in the short term.

“The divestiture programme requires increased impetus as a critical enabler to reducing our debt encumbrance to manageable levels,” he said.

During the reporting period, the company suffered a headline loss of R342 million and an operating loss of R2.1 billion, up from R668 million in the corresponding interim period.

Read: Nampak plunges over 30% on R2bn capital raise proposal

Revenue was up 4% to R8.4 billion, lifted by increased volumes in Bevcan South Africa and improving volumes in Angola. However, revenue was partially offset by volume reductions in Bevcan Nigeria and DivFood, while the rest of Africa’s volumes remained stable.

Operating profit before net impairment losses fell 62% to R259 million, adversely impacted by devaluation losses of R571 million in Angola and Nigeria on the back of exchange rate movements.

The company said that impairment losses of R2.4 billion and net finance costs of R494 million resulted in a loss of R2.4 billion.

Nampak’s share price was 6.06% stronger on Wednesday morning, trading at  R0.70.