SOUTH African packaging group Nampak Limited is disposing of its subsidiary, Nampak Zimbabwe Limited, to diversified local firm, TSL Limited, for US$25 million as part of its asset disposal plan.
In August 2023, Nampak announced an asset disposal plan to raise total proceeds of circa ZAR2,6 billion (US$148,09 million) over an 18-month period as part of a turnaround strategy to repay its debt.
The group’s annual report for the year ended September 30 2023 revealed that Nampak had a net debt of ZAR5,2 billion (US$296,2 million).
The sale of its Zimbabwe business comes despite Nampak saying in June that its local unit was performing satisfactorily, notwithstanding economic headwinds.
“Shareholders are hereby advised that the company, through its wholly owned subsidiary, Nampak Southern Africa Holdings Limited, has entered into negotiations which have culminated in the acceptance by the seller of a binding offer from TSL Limited, registration number 778/1957, the issued shares of which are listed on the Zimbabwe Stock Exchange for the acquisition by the purchaser of the seller’s 51,43% shareholding in Nampak Zimbabwe Limited, for a maximum purchase consideration of US$25 000 000,” Nampak said in a statement yesterday.
Nampak’s 51,43% share of the net assets of the Zimbabwe unit was valued at ZAR292,5 million (US$16,66 million) as at September 30, 2023.
“Nampak Zimbabwe is a holding company, the shares of which are listed on the Zimbabwean Stock Exchange. Nampak Zimbabwe manufactures paper, plastic and metal packaging products and forms part of the Nampak group of companies.
“The disposal is in accordance with the company’s asset disposal plan. Nampak Zimbabwe is an identified asset in terms of the asset disposal plan, the disposal of which will significantly contribute to the reduction of the group’s net debt and eliminate the associated risk and volatility of this economy. The purchase consideration will be applied towards the further settlement of debt of Nampak.”
- Nampak exits Zim, sells subsidiary for US$25m
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According to the group, the sale will involve US$23 million to be paid within 10 business days following fulfilment or waiver of the last condition precedent of the initial purchase consideration.
The remaining US$2 million will be payable in equal tranches of US$1 million at the end of the first and second anniversaries after the payment of the initial purchase consideration.
Nampak said the purchase consideration would be payable in United States dollars to the seller or its nominee being another wholly owned subsidiary of Nampak.
The group noted that the disposal is subject to the fulfilment or waiver (to the extent legally permissible) conditions precedent.
These are the execution of a share purchase agreement in respect of the disposal which shall contain, in addition to stating further details of the terms and conditions stated in the binding offer letter, standard representation and warranties regarding the balance sheet of Nampak Zimbabwe as at July 31, 2024 including but not limited to recoverability of debtors, stock obsolescence and liability disclosures, covenants, conditions precedent and provisions for indemnity and non-compete clauses and such agreement becoming unconditional in accordance with its terms.
The conditions also include approval by the shareholders of the purchaser in a general meeting; the granting of all necessary regulatory approvals including approval by the Competition and Tariff Commission and the exchange control authorities and delivery of such things necessary to give Nampak further comfort about the ability of the purchaser to complete the transaction.
The group also announced that it in terms of the Companies and Other Business Entities Act [Chapter 24:31] and the Zimbabwe Stock Exchange listings rules, it would make an offer to the remaining shareholders of Nampak Zimbabwe Limited following the disposal.
TSL Limited also has a logistics and packaging segment.
