JOHANNESBURG - Shareholders in Aveng have voted overwhelmingly in favour of resolutions to allow the listed construction and engineering group to launch a R500 million rights offer to raise cash to fund its internal liquidity requirements.
Aveng, which plans to proceed with the early redemption of a R2 billion bond due for repayment in July next year, reduced the size of the planned rights offer after it reached agreement in principle with listed engineering and construction group Murray & Roberts (M&R) about the proposed acquisition of Aveng by M&R.
In terms of that proposed transaction, M&R would provide Aveng financing facilities of R1.8bn.
The three resolutions related to the rights offer were approved yesterday by at least 94.05percent of the shareholders present and voting.
These resolutions related to the amendment of Aveng’s memorandum of incorporation to increase the authorised share capital of the company to facilitate the proposed rights offer and to grant the directors the authority to issue Aveng shares representing more than 30percent of the issued capital of Aveng.
Aveng added that it would need to apply to the Takeover Regulation Panel for consent to proceed with the proposed rights offer, because of the engagement with M&R about the proposed transaction.
It said that it would use a further R200million of bank debt, which was still subject to bank approval, adding that M&R was supportive of Aveng proceeding with the proposed rights offer, irrespective of whether the acquisition proceeded or not.
The group said the timing of the proposed rights offer was expected to be announced to shareholders in due course.
Aveng said despite the recent developments in regard to the proposed hostile takeover of M&R by listed German family-owned investment holding firm Aton, its board still believed there was merit in the potential combination of Aveng and M&R and that it was in the best interests of Aveng and its stakeholders.
“The Aveng board is therefore continuing to engage with Murray & Roberts’ board and would continue progressing the M&R transaction,” it said.
However, Aveng stressed that a formal offer had not yet been made by M&R for the group.
Aton, which owns 43.7percent of M&R’s shareholding, has already indicated it was not supportive of M&R’s proposed acquisition of Aveng, claiming the transaction’s “sole intent appears to be to frustrate Aton’s compelling proposition to M&R shareholders”.
Aveng added that it continued to pursue the sale of the identified non-core assets and had made progress in the disposal of Aveng Grinaker-LTA, Aveng Trident Steel and other properties.
It said it had accelerated the preparation process for the sale of Aveng’s manufacturing businesses and would launch the disposal process for the non-core assets shortly.
The sale of these non-core assets follows Aveng in February announcing the results of a strategic review and its intention to dispose of these assets.
Aveng said at the time that these disposals would allow management to focus on the core operations of Moolmans, its underground and surface mining business, and McConnell Dowell, its engineering, construction, and maintenance contractor.
Shares in Aveng dropped 15.79percent on the JSE yesterday to close at 32cents.