African Brick Centre says the sale of its Honeydew property was under re-negotiation after the buyer said it could not raise the full purchase price.

Brick manufacturers, faced with a huge surplus, plan to sell stock below cost and to extend their annual shutdown next month.

Robust growth in the residential building industry over the past two years has spurred another building materials company, African Brick Centre, to list on the JSE’s AltX on Monday to raise money for expansion.

African Brick Centre has aggressively rolled out its retail network to 24 outlets in five provinces, but the demand for building materials just keeps rising.

Group CEO Beno van Graan said on Friday: “To accommodate the high demand for our products, a third manufacturing facility is planned at Zuurbekom, a 70ha industrial site near the large Syferfontein clay reserves.”

The group consists of two divisions, clay brick manufacturing and the retail distribution of building supplies focusing on the “wet trade”, which Van Graan said were the raw materials used to build the shell of a building, such as cement, sand, roof tiles and paint.

“At a cost of R15m, the plant (in Zuurbekom) should be operational within 30 weeks after construction commences. It will have a capacity to produce 40-million bricks a year, with construction planned to start shortly after the listing date,” said Van Graan.

He said money from the listing would accelerate the planned expansion of the African Brick Centre brand and its retail network and facilitate the introduction of new products. It would also facilitate funding for an empowerment transaction and further acquisitions.

He said additional retail outlets were in the pipeline, with at least six franchise outlets expected to open over the next 12 months. Four of these were at advanced negotiation stages with third parties.

In a prelisting private placement on Friday, the company offered 45-million shares at a subscription price of R1 each, raising R45m. Another R55m will be raised through the sale of 55-million shares by the vendors at a sale price of R1 each.

A total of 320-million shares were issued on Monday on the open market with a par value of 0,1c per share. African Brick Centre’s original manufacturing facility is situated in Krugersdorp, with a second in Lenasia.

“The company also owns a retail division. It is the first face-brick manufacturer also to stock its stores with a full complement of hardware products.

“Its strategic advantage exists in selling through its own branded retail outlets, with its competitors relying mainly on large wholesale consumers and project developers,” said Van Graan.

Through its retail chain, African Brick Centre sells 120-million bricks a year to a client base of 12000. “Since 1983, the company has sold close to 1-billion bricks,” said Van Graan.