JOHANNESBURG - Distribution and Warehousing Network (Dawn), the JSE-listed plumbing and hardware brands manufacturer and distributor, has received overwhelming support from five shareholders for the sale of its 49% interest in Grohe Dawn Watertech (GDWT) to listed Japan-based Lixil Group Corporation for R324.5million.
The company said yesterday that it had obtained written undertakings from five shareholders holding 72.5% of the total Dawn shares in issue to vote in favour of the transaction at the general meeting to be held to obtain shareholder approval for the transaction. Dawn said further details about these written undertakings would be included in the circular to shareholders containing the full details of the transaction, and incorporating a notice convening the general meeting, which would be posted to shareholders in due course.
The sale of Dawn’s 49% interest in GDWT to the Lixil Group was announced last week. However, Dawn will remain a long-term master distributor of the GDWT product range in South Africa and 12 countries in sub-Saharan Africa, following the completion of the transaction.
Edwin Hewitt, the chief executive of Dawn, said last week that they had achieved the best of both worlds, because the disposal would result in Dawn being debt-free and it would retain the master distributorship to a highly desirable product range.
In Dawn’s audited consolidated financial statements for the year to March this year, the investment in GDWT had a carrying value of R290.6m and, including impairments of R65.7m, contributed to the total group attributable loss of R637.4m for the period.
Dawn intends to use the transaction proceeds to repay the group's existing R200m debt with the remainder reinvested in the core master distribution operations of the group. Hewitt said that Dawn’s turnaround plan had resulted in “huge chunks of costs” being taken out of the company, new management being introduced in every group business and right-sizing of the business.
The cost to the group of downsizing and restructuring in the year to March was R349.1m. Hewitt said that the group was on course to achieve its stated year-end objective to achieve a break-even this year.