JOHANNESBURG - Distribution and Warehousing Network (Dawn), the listed manufacturer and distributor of plumbing and hardware brands, has agreed to sell its 51% shareholding in Swan Plastics for R35million.
The company said yesterday that Dawn Consolidated Holdings, a wholly-owned subsidiary of the group, had agreed to sell the shareholding of Swan Plastics to the company’s minority shareholders Michael Swanson, Phillip Cotterill and Desmond Robins. Swan Plastics is largely involved in the manufacturing of PVC products and water waste systems and the sale agreement is unconditional.
Dawn said it intended to use the proceeds of the sale for working capital, which would reduce its interest burden and associated gearing levels. It said the audited net asset value of Swan Plastics at end-March this year was R45.3m.
The rationale for the sale was related to a written call option entered into between the shareholders in 2013 in terms of which Dawn Consolidated Holdings was obliged to purchase the minority shareholders’ equity in and claims against Swan Plastics if certain events occurred.
Dawn said this call option was disclosed as a derivative liability to the value of R72.2m in the group’s audited financial statements to end-March.
“The minority shareholders indicated they wanted to trigger the call option. It was agreed to dispose of the remaining shareholding for R35m instead. The derivative liability will be de-recognised from the effective date of the sale,” it said.