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Disposal of the South American shipping business
Imperial Logistics Limited
(Incorporated in the Republic of South Africa)
Registration number: 1946/021048/06
Share code: IPL
ISIN: ZAE000067211
(“Imperial” or “Group”)
DISPOSAL OF THE SOUTH AMERICAN SHIPPING BUSINESS
1. INTRODUCTION
Imperial shareholders are referred to the announcement released on the Stock Exchange News
Service on Monday, 04 May 2020, in which they were advised, inter alia, that Imperial’s South
American shipping business will be continued on a stand-alone basis but will remain available
for sale.
The board of Imperial is pleased to announce that Imperial Mobility International BV, Imperial
Logistics International B.V. & Co. KG and Imperial Fleet Services GmbH, all wholly owned
subsidiaries of Imperial, have closed a transaction on 16 April 2021 (“closing date”) in respect
of the sale of its respective interest, being assets, shares and claims, in its South American
shipping business (“South American shipping business” or “Interest in the South American
Operations”) to Hidrovias do Brasil S.A. and other wholly owned subsidiaries of Hidrovias do
Brasil (“Purchaser”) (“Transaction”).
2. BACKROUND INFORMATION OF THE PURCHASER
Hidrovias do Brasil S.A. is an independent integrated logistics provider focused on waterways
logistics services in Latin America. Founded in 2010, the Purchaser operates in large logistics
corridors in the north of Brazil (Tapajós-Amazon Rivers) and in the Paraguay-Paraná river
system. In the Northern Corridor (Miritituba-Barcarena, Pará), the Purchaser offers an
integrated logistics solution to transport grains from the midwest region of Brazil to an export
port. In the South Corridor, operations use the Paraguay-Paraná rivers system, where the
Purchaser transports over 6 million tons of cargo per year including iron ore, grains, fertilisers
and pulp.
3. BACKGROUND INFORMATION OF THE SOUTH AMERICAN SHIPPING BUSINESS
In 2014, Imperial expanded its shipping business by entering the South American market with
presence through the South American shipping business in the Hidrovia-Paranha-Paraguay
waterways and with access to the largest seaports in the region. The business has a large and
sophisticated fleet of more than 90 owned vessels and safely moves approximately 1.6 million
tons of diversified products (dry bulk cargo) every year. Primary customers are blue chip
industrial groups in the steel and agriculture industries. The South American shipping business
employs approximately 150 people led by an experienced management team.
The South American shipping business generated revenue and earnings before interest, taxes,
depreciation and amortisation (“EBITDA”) for the year ended 30 June 2020 of c. USD 36.0 million
and c. USD 9.4 million respectively (approximately ZAR 522 million and ZAR 136 million,
respectively).
4. RATIONALE FOR THE TRANSACTION
As previously communicated to the market, it is Imperial’s strategic intent to become a ‘One
Imperial’ business and serve as the ‘Gateway to Africa’ to its clients, principals, and customers.
Imperial is transforming from a portfolio of regional businesses to an integrated end-to-end
logistics and market access business that is focused on Africa, leveraging its scale, competitive
advantages and capabilities in the healthcare, consumer, chemicals, automotive, and industrial
and commodities industries. As such, Imperial has thoroughly assessed the strategic fit of its
Logistics International business and decided to exit this business in a phased approach as it is
non-core. The South American shipping business forms part of this process and follows the
disposal of the European shipping business, which was concluded on 31 July 2020. The
remaining freight management and contract logistics operations within the International
Logistics business remain for sale and Imperial is in the process of disposing of these, as
announced at the Group’s F2021 interim results on 23 February 2021.
5. SALIENT TERMS OF THE TRANSACTION
The agreed maximum enterprise value for the Interest in the South American Operations is
USD 90.0 million (approximately 1,305 million) which equates to a multiple of 9.6X FY2020
reported EBITDA. The enterprise value includes an earn-out component of up to USD 5.0 million
(approximately ZAR 73 million). The earn-out component is payable dependent on water levels
over the 4-year period commencing on 1 January 2021. The earn-out comprises 4 annual
payments of up to USD 1.25 million each (approximately ZAR 18 million) with each annual
payment settled in cash by 31 March of the following year.
The maximum aggregate purchase price, payable in cash, for the Interest in the South American
Operations is approximately USD 100 million (approximately ZAR 1,450 million) which includes
‘locked box’ interest from 1 July 2020 until the closing date as well as the full earn-out payment.
The rights, benefits and advantages of the South American shipping business accrued to the
Purchaser from 1 July 2020 in terms of a ‘locked box structure’.
The Transaction includes contractual undertakings normal for a transaction of this nature,
including warranties, interim undertakings, non-compete undertakings and termination rights.
The Transaction is not subject to any outstanding conditions or regulatory approvals.
6. NET ASSETS AND PROFITS ATTRIBUTABLE TO THE SOUTH AMERICAN SHIPPING BUSINESS
The unaudited attributable loss after tax for the six months ended 31 December 2020 was USD
4.7 million (approximately ZAR 68 million) and the unaudited net asset value as at 31 December
2020 was USD 110.3 million (approximately ZAR 1,600 million). These were prepared under
International Financial Reporting Standards in respect of the South American shipping business
being divested.
Imperial is satisfied with the quality of the management information from which the above
financial information has been extracted.
7. APPLICATION OF PROCEEDS
The proceeds of the Transaction will be used to optimise the financial position of Imperial,
reducing its overall existing debt in the short-term and will be invested in new growth areas in
line with the Group’s strategy in due course.
8. CATEGORISATION AND EXCHANGE RATE
The Transaction is classified as a Category 2 Transaction in terms of the JSE Listings
Requirements and there are no related parties involved. The exchange rate of ZAR 14.5 / USD
was utilised in respect of the Transaction calculated as at 15 April 2021.
Bedfordview
19 April 2021
Corporate sponsor to Imperial: RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Financial Advisor to Imperial: BNP Paribas S.A.
International Legal Advisors to Imperial: Taylor Wessing Partnerschaftsgesellschaft mbB
Date: 19-04-2021 08:00:00
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