DURBAN - Nampak, Africa's largest diversified packaging manufacturer, intends to sell subsidiary Nampak Glass to majority black-owned company Isanti Glass1 for R1.5 billion as it seeks to reduce its debt.
The announcement on Friday of the sale of the glass business came two days after the group said it had stopped the disposal of its crates and drums business “following a restructuring within the unit and securing a contract from a major soft drinks manufacturer for a period of three years”.
Nampak, which has a footprint in 11 African countries, has been trading under a cautionary for seven months regarding the disposal of the business.
WATCH:
Video by: Chelsea Lotz, Business Report TV
Chief executive André de Ruyter said the sale of the Nampak Glass business is in line with Nampak’s strategy to sharpen its focus on strategic substrates.
“We continue to rationalise the portfolio to optimise and improve returns on capital and reinforce our strategic intent. Proceeds from this disposal will be primarily used to reduce both local and international interest bearing debt and strengthen the company's financial position,” De Ruyter said. The group said the R1.5bn price consisted of R992 million for the property, plant and equipment plus the value attributable to the agreed levels of net working capital of the business at the closing date, which is estimated to be R500m.
Nampak said the glass business was one of two primary glass container manufacturers in South Africa and it services beverage and food manufacturers with an estimated market share of 25 percent.
Nampak has come good on its promise as it stated in April that the preferred bidder was a black-owned South African company.
Isanti Glass 1 is owned by Kwande Capital with a 60 percent stake and Sabsa Holdings with a 40 percent stake.
Kwande is a black-owned and managed investment company established in 2010, with a primary focus on investing in companies with high growth potential in strategic sectors, primarily in the manufacturing and oil and gas sectors.
Sabsa is the holding company of South African Breweries, a subsidiary of Anheuser-Busch InBev (AB InBev).
However, the disposal is subject to regulatory conditions and the approval of the South African competition authorities.
Nampak Glass, established in 1984, operates 49 facilities worldwide. It operates three furnaces which supply nine forming lines at its manufacturing facility in Roodekop, Gauteng.
The group said in its results for the six months to the end of March that the value of the net assets and losses attributable to the net assets amounted to R1.84bn and R105m respectively.
Nampak closed 1.45 percent higher at R9.11 on Friday.