Roy Cokayne

Leasing and capital equipment company Eqstra has posted a circular to shareholders of Protech Khuthele Holdings detailing its offer to acquire the remaining 67.2 percent of the ordinary shares in the listed civil engineering group that it does not already own, for 60c a share.

This values the proposed transaction at about R146 million. The offer is at a premium of 40.7 percent to the 90-day volume-weighted average traded price of Protech shares on the JSE on December 4 and is subject to certain conditions.

Eqstra owns 32.8 percent of Protech and has secured irrevocable undertakings in support of the offer for an additional 30.3 percent stake. The offer opens today and is scheduled to close on July 26.

Walter Hill, Eqstra’s chief executive, said yesterday that this full and final offer provided Protech shareholders with an attractive cash price.

“Our offer positions Protech to benefit from the synergies and economies of scale that can be achieved by sharing resources between Eqstra and Protech, for example in short-term plant rental, the development of infrastructure and smaller scale mining-related activity.

“Protech will be better positioned to compete for business and achieve optimal returns with Eqstra’s access to funding at more competitive rates,” he said.

The unsolicited offer by Eqstra in December last year to acquire the entire shareholding in Protech it did not already own, initially appeared to have turned hostile.

Protech said it had received correspondence from Eqstra on November 30 containing the unsolicited bid and a request that it must indicate by December 5 that it would support the proposed deal or Eqstra would proceed with a hostile offer.

Protech described the time limits in Eqstra’s bid as “unreasonable”, but subsequently confirmed it had formally responded to Eqstra, indicating it was happy and willing to engage with the company regarding the proposed transaction.

Hill said the process to acquire Protech had been “protracted and frustrating”, but hoped they could come “to a swift and friendly conclusion”.

Eqstra reported yesterday that Rio Tinto Benga, which had contracted wholly owned Eqstra subsidiary Eqstra Mozambique to conduct its opencast mining operations at its Benga mine in Mozambique, had issued a force majeure notice because of flood damage to the Sena railway line preventing the export of coal through the port of Beira.

It said Rio Tinto had informed Eqstra that its contractual obligations would be suspended from midnight on February 20 because of the impact of the flood damage.

Eqstra said the duration of the force majeure was unknown and shareholders would be updated as the company gained clarity.

Eqstra shares closed 2.1 percent down at R6.21 and Protech ended 1.9 percent higher at 53c on the JSE yesterday.