AECI
LIMITED
(Incorporated
in the Republic of South
Africa)
(Registration
No. 1924/002590/06)
Share
code: AFE ISIN:
ZAE000000220
Hybrid
code: AFEP ISIN: ZAE000000238
Bond
company code: AECI
LEI:
3789008641F1D3D90E85
("AECI"
or the
"Company")
SALE OF MUCH ASPHALT PROPRIETARY
LIMITED
-
INTRODUCTION
Shareholders and noteholders are advised that AECI, has entered
into a Share Purchase Agreement (the
"Agreement")
with Old Mutual Private Equity, acting through OMPE VI GP
Proprietary Limited ("OMPE"),
and Sphere Investments Proprietary Limited ("Sphere")
(together the "Consortium")
("the
Purchasers"),
to dispose of 100% of its shareholding in its wholly-owned
subsidiary Much Asphalt Proprietary Limited ("Much
Asphalt")
for an estimated consideration of R1 100
million, subject to adjustments as detailed in paragraph 4.3 below
(the "Consideration"
or "Proceeds")
(the "Transaction").
The Consortium's beneficial owners are OMPE and Sphere. The
Consortium members are not 'related parties' in relation to AECI,
as defined in the JSE Listings Requirements.
-
OVERVIEW OF MUCH ASPHALT
Much Asphalt is South Africa's
leading independent manufacturer and supplier of bituminous
products. The company manufactures and delivers premium-grade
products to customers for use in infrastructure such as roads,
airport runways, and private use, including hot and cold asphalt
products, bituminous road binders, emulsions, primers, pre-coats
and modified binders.
-
RATIONALE
FOR THE TRANSACTION
In alignment with AECI's strategy and optimising its portfolio to
create a platform for growth, AECI is focusing on its AECI Mining
and AECI Chemicals businesses and divesting from businesses with
limited synergies with the chosen core businesses.
This strategic shift aims to streamline operations, enhance
efficiency, and leverage in-house expertise, by concentrating
efforts on areas where AECI has a competitive advantage and strong
market potential. AECI will be positioned for sustainable growth
and improved performance.
-
KEY TERMS
OF THE TRANSACTION
4.1.
Suspensive conditions
The Transaction is subject to the fulfilment of certain suspensive
conditions by no later than 30 June
2025
(or
such other date as may be agreed by the parties in
writing),
including:
-
the
parties obtaining (where applicable) the necessary approval by the
competition authorities;
-
AECI
procuring and delivering to the Purchaser the consents from the
noteholders of the notes issued under AECI's Domestic Medium Term
Note Programme (the "AECI
DMTN Programme") for the
release of Much Asphalt as original guarantor from its obligations
under the AECI DMTN Programme;
-
Much
Asphalt delivering to the Consortium:
-
a letter
regarding the release from the relevant guarantees;
-
written
consents regarding the Transaction in respect of the relevant
facilities;
-
AECI
delivering to the Consortium written consent from the relevant
facility agent regarding the Transaction; and
-
The
conclusion of a restructuring agreement between AECI Mozambique and
Much Asphalt Mozambique with respect to Much Asphalt's operations
in Mozambique.
4.2.
Closing Date
The Transaction will be effective on the later of (i) the
11th
business day following the date on which the last of the suspensive
conditions are fulfilled or waived, as applicable (the
"Fulfilment
Date")
or (ii) the 11th
business day following the date on which the "locked-box" date
accounts are finalised, with either of these dates being the
"Closing
Date".
Shareholders and noteholders will be informed once all of the
remaining suspensive conditions have been fulfilled and the
anticipated implementation date of the Transaction.
4.3.
Consideration
The Consideration has been structured as a "locked-box" structure
with an effective date of 31 December
2024 (the "Locked-Box
Date").
The "locked-box" component is subject to ordinary course leakage
provisions and the net Consideration payable will not exceed
R1 500 million.
4.4.
Use of Proceeds
The Proceeds will be deployed in line with AECI's capital
allocation framework.
4.5
Warranties and other significant terms of the
Agreement
The Agreement provides for customary warranties, indemnities,
events of default, interim period and other undertakings that are
normal for a transaction of this nature including a right of either
(i) the Purchasers to terminate the Agreement in the event that a
material adverse change has occurred at any time prior to the
Closing Date, or (ii) AECI to terminate in the event
that a
material adverse change has occurred at any time prior to the
Locked Box Date.
-
FINANCIAL
INFORMATION
5.1
Net value of assets disposed
The value of the net assets of Much Asphalt (deemed to be the value
of the business assets less business liabilities to be disposed of)
as at 31 December 2023 was R1 592
million.
5.2
Earnings after tax
Earnings after tax for the year ended 31
December 2023 attributable to Much Asphalt was R74
million.
The financial information has been extracted from the most recent
published audited annual financial statements for the year ended
31 December 2023, which were prepared
in terms of International Financial Reporting Standards.
-
CLASSIFICATION
OF THE TRANSACTION
The Transaction constitutes a category 2 transaction in terms of
the JSE Listings Requirements and does not require AECI shareholder
approval.
Woodmead,
Sandton
4 November 2024
Financial
Adviser to AECI
Investec
Bank Limited
Legal
Adviser to AECI
Edward
Nathan Sonnenbergs Incorporated
Legal
Adviser to the Consortium
Cliffe
Dekker Hofmeyr Incorporated
Equity
Sponsor
Rand Merchant Bank (a division of FirstRand Bank
Limited)
Debt
Sponsor
Questco
Proprietary Limited