South African conglomerate, Aveng Group has agreed to sell its precast concrete products manufacturing business, Infraset, as a going concern to the Colossal Africa Consortium-a newly formed wholly black-owned investment special purpose vehicle, for R200 million.
The planned disposal includes Infraset businesses in South Africa, Zambia, Mozambique, Eswatini (formerly Swaziland) and Zimbabwe.
Aveng disclosed yesterday, that the proposed transaction will be structured on a cash and debt-free basis for a net transaction consideration of R180m to be settled in cash on the effective date, with a further cash top-up of R20million payable within two years subject to certain conditions being met.
The Colossal Africa Consortium comprises Isongo Investments, which provides specialised services and products for railway industries, and Colossal Africa Infrastructure, which has interests in the materials supply sector.
Eric Diack, the executive chairperson of Aveng, says the disposal of non-core assets is a key part in the delivery of Aveng’s strategic action plan and is receiving significant attention from the Aveng management team.
“Not only have we been able to realise acceptable value for our shareholders through this sale, we are also confident that the Infraset business will be successful in the hands of the new owners, ensuring a sustainable future for employees and customers,” Diack adds.
Diack says the proceeds from the transaction will be utilised in strengthening Aveng’s financial position and reduce overall debt.
Infraset has more than 85 years’ experience in the manufacturing of infrastructure products and manufactures a range of precast concrete products to world-class quality standards.
Aveng affirms Infraset as a competitive player in all categories, including civil engineering, landscaping, poles and masts, roof tiles and a leader in the rail sleeper industry.
Infraset’s net asset value before impairment was R491million for the year up to June. It reported a loss after taxation before impairment of R52 million for this reporting period. Following the reclassification of Infraset to hold for sale and the resultant fair value adjustment, the unit reported an impairment of R365 million for the year.
Infraset’s disposal is in line with the results of Aveng’s strategic review announced last February.
The proposed transaction is still subject to a number of conditions with plans to close by the end of April next year. These conditions include the conclusion of the final and binding agreements and the parties obtaining all statutory and regulatory approvals in all jurisdictions, including the approval of the Competition Commission.