DURBAN - Invicta Holdings ballooned more than 21 percent on the JSE yesterday after the investment holding group entered into an agreement with CNH Industrial SA to sell four of its businesses for about R507 million to service its debt.
Invicta said it would sell businesses within its Capital Equipment Group (CEG) segment for R507m excluding interest bearing debt as at the end of March plus an additional $6m goodwill (R99.94m). The group said the disposal would be effective next year once the necessary regulatory approvals and outstanding suspensive conditions had been met.
It said that the disposal fell under a category 1 transaction on the JSE’s listing requirements and is subject to Invicta’s shareholder approval.
CNH Industrials said the transaction would be also subject to regulatory approvals.
Invicta’s targeted businesses include Northmec, South Africa’s most established agricultural equipment distributor and the sole distributor of Case IH equipment and implements; CSE, an equipment distributor operating for more than 50 years and the sole distributor of tractor loader backhoes and skid steer loaders; NHSA, a spare parts distributor in southern Africa mainly focusing on agriculture; and Landboupart, a distributor of spare parts and implements.
“The rationale for Invicta is to apply the disposal consideration in the short-term, to reduce the most expensive debt of the group, hereby realigning its funding and enabling the company to focus on other strategic initiatives and its core operations,” Invicta said.
The group did not declare a dividend for the six months to the end of September last year, despite reporting a 228percent increase in profits to R208m. It said given its higher gearing levels, it would not declare a dividend, but promised to resume a normal dividend policy once cash flow and debt levels permitted.
CNH Industrial plans entrench its footprints in the market by continuing with its strategy of a direct operational footprint and infrastructure in South Africa for the selling of world-class products in both South Africa and the southern African market.
“CNH Industrial aims to further develop its Case IH and Case Construction Equipment brands’ presence together with after-market sales and services in South Africa and other southern African markets, strengthening its position and ties with its customer base by taking full operational management of its commercial distribution and after-market network,” CNH Industrial said.
Invicta shares rose 19.24percent on the JSE to close at R7.50 yesterday.