Companies / 19 February 2019, 12:30pm / Roy Cokayne
JOHANNESBURG – Listed construction and engineering group Aveng has agreed to sell its precast concrete products manufacturing business Infraset as a going concern to the Colossal Africa Consortium, a newly formed wholly black-owned investment special purpose vehicle, for R200 million.
The planned disposal includes Infraset businesses in South Africa, Zambia, Mozambique, Eswatini (formerly Swaziland) and Zimbabwe.
Aveng said yesterday that the proposed transaction would be structured on a cash and debt-free basis for a net transaction consideration of R180m to be settled in cash on the effective date, with a further cash top-up of R20m payable within two years subject to certain conditions being met.
The Colossal Africa Consortium comprises Isongo Investments, which provides specialised services and products for railway industries, and Colossal Africa Infrastructure, which has interests in the materials supply sector.
Eric Diack, the executive chairperson of Aveng, said the disposal of non-core assets was a key part in the delivery of Aveng’s strategic action plan and was receiving significant attention from the Aveng management team.
“Not only have we been able to realise acceptable value for our shareholders through this sale, but we are confident that the Infraset business will be successful in the hands of the new owners, ensuring a sustainable future for employees and customers,” he said.
Diack said the proceeds from the transaction would be used to strengthen Aveng’s financial position and reduce overall debt.
Infraset has more than 85 years’ experience in the manufacturing of infrastructure products and manufactures a range of precast concrete products to world-class quality standards.
Aveng said Infraset was a competitive player in all categories, including civil engineering, landscaping, poles and masts, and roof tiles, and a leader in the rail sleeper industry.
Infraset’s net asset value before impairment was R491m for the year to June, and it reported a loss after taxation before impairment of R52m for this reporting period. Following the reclassification of Infraset to held for sale and the resultant fair value adjustment, the unit reported an impairment of R365m for the year.
The disposal of Infraset was in line with the results of Aveng’s strategic review announced last February.
The outcome of Aveng’s strategic review resulted in the adoption by the board of a new and focused strategy for the group to become an international infrastructure and resources group operating in selected fast-growing markets.
As part of this process, the group reported that it would sell businesses and assets that did not support its overall long-term strategy, with the individual Aveng manufacturing business units among those identified for sale.
The proposed transaction was still subject to a number of conditions but was expected to close by the end of April next year. These conditions include the conclusion of the final and binding agreements, and the parties obtaining all statutory and regulatory approvals in all jurisdictions, including the approval of the Competition Commission.
Shares in Aveng closed unchanged on the JSE yesterday at 4 cents.