Imperial Logistics reaches deal to sell its South American shipping business
CAPE TOWN - IMPERIAL Logistics has moved further to refocus its operations after announcing yesterday that it would sell its South American shipping business of more than 90 vessels to Hidrovias do Brasil for about $100 million (R1.43 billion).
Imperial’s share price increased 1.95 percent to R49.07 yesterday afternoon. The share closed 1.08 percent higher at R48.65 on the JSE yesterday.
Imperial has been transforming from a portfolio of regional businesses to an integrated end-to-end logistics and market access business focused on Africa.
The aim of the restructuring was to leverage its scale, competitive advantages and capabilities in the health care, consumer, chemicals, automotive, industrial and commodities industries.
Imperial had previously assessed the strategic fit of its Logistics International business and had opted to exit the business in a phased approach, as it was non-core. The South American shipping business had been held for sale since May last year, and had been operated on a stand-alone basis since then.
The sale of the South American shipping business followed the disposal of the European shipping business, which was concluded on July 31 last year. Hidrovias do Brasil is an independent logistics provider focused on waterways services in Latin America. It operates in large logistics corridors in the north of Brazil and in the Paraguay-Paraná river system.
In the Northern Corridor (Miritituba-Barcarena, Pará), Hidrovias do Brasil offers a logistics solution to transport grains from the midwest region of Brazil to an export port. More than 6 million tons of cargo a year – including iron ore, grains, fertilisers and pulp – are transported in the Southern Corridor.
Imperial expanded its shipping business in 2014 by entering the South American market with a presence through the South American shipping business in the Hidrovia-Paranha-Paraguay waterways and with access to the largest seaports in the region.
The business moves some 1.6 million tons of dry bulk cargoes every year, with the major clients being blue-chip industrial groups in the steel and agriculture industries. The South American shipping business generated revenue and earnings before interest, taxes, depreciation and amortisation of $36 million and $9.4m, respectively, for the year to the end of June 2020.
The agreed maximum enterprise value for the interest in the South American operations was $90m. This value included an earn-out component of up to $5m, which was payable dependent on water levels over four years, starting on January 1 this year.
The unaudited attributable loss after tax for the six months to the end of December last year was $4.7m, and the unaudited net asset value as at December 31 last year was $110.3m.
The proceeds of the transaction would be used to optimise Imperial’s financial position by reducing debt in the short term and to invest in new growth areas.