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Disposal of Tractionel Group
CONSOLIDATED INFRASTRUCTURE GROUP LIMITED
(in business rescue)
(Incorporated in the Republic of South Africa)
(Registration number 2007/004935/06)
JSE share code: CIL ISIN: ZAE000153888
(“CIG” or “the Company”)
DISPOSAL OF TRACTIONEL GROUP
1. Introduction
Shareholders are advised that CIG has entered into a share sale agreement with ENZA Construction Proprietary
Limited (the “Purchaser”), an unrelated third party to dispose of:
- 100 ordinary shares in the issued share capital of Tractionel Maintenance Services Proprietary Limited
(“TMS”) comprising the entire issued share capital of TMS;
- 60 ordinary shares in the issued share capital of Tension Overhead Electrification Proprietary Limited
(“Tractionel”), comprising the entire issued share of Tractionel;
- 100 ordinary shares in the issued share capital of Tractionel Group Holdings Proprietary Limited
(“Tractionel Holdings”) (dormant), comprising the entire issued share capital of Tractionel Holdings; and
- 100 ordinary shares in the issued share capital of Tractionel Specialised Plant Proprietary Limited
(“Tractionel Plant”) (dormant), comprising the entire issued share capital of Tractionel Plant (collectively
“Tractionel Group”),
(together the “Sale Shares”) together with any claims CIG has against Tractionel Group (“Sale Claims”) in
accordance with the terms of the Transaction, as further set out below (the “Transaction”).
Tractionel Group is an electrical construction company that specialises in electrical infrastructure projects,
with a focus on both railway and power solutions.
2. Rationale for the Transaction
CIG commenced voluntary business rescue proceedings on 9 November 2020 and as part of the long-term
solution for CIG, the business rescue practitioners (“BRPs”) have no alternative but to dispose of a number of
CIG’s business assets on an urgent basis in order to reduce CIG’s liabilities, meet bank lending obligations, and
to meet CIG’s ongoing working capital requirements. In addition, CIG is unable to continue to support the
Tractionel Group as a going concern in terms of guarantee requirements and shareholder loan funding. The
proceeds from the Transaction, together with other cashflow initiatives being undertaken by the BRPs, will
provide CIG with the liquidity required to continue to meet its general and business rescue operating cost
obligations (and thus avoid immediate liquidation) while the business rescue plan is being finalised.
3. Salient terms and conditions precedent of the Transaction
The Transaction is subject to the fulfilment or waiver (as the case may be) of the following conditions precedent
by 30 April 2021 (or such later date as agreed to between the parties) (the “Completion Date”):
i. to the extent necessary the Transaction being approved by the relevant Competition Authorities and all
other regulatory approvals necessary for the implementation of the Transaction being obtained;
ii. obtaining the approval of the board of directors and shareholders of the Purchaser to conclude the
Transaction;
iii. Tractionel having effected payment to CIG of R10 000 000 which amount is specifically excluded from
the Sale Claims;
iv. obtaining the consent and approval to the Transaction from the National Empowerment Fund, in its
capacity as an indirect shareholder of the Purchaser;
v. the Purchaser achieving the release of CIG from various guarantees made on behalf of Tractionel to the
satisfaction of CIG; and
vi. the Purchaser confirming in writing to CIG that the Purchaser is satisfied that no material adverse change
has occurred.
Subject to the fulfilment of the above-mentioned conditions precedent, the Purchaser will acquire the Sale Shares
and Sale Claims of Tractionel from CIG for an aggregate consideration of R7 500 000 comprising the base
purchase price of R5 000 000 plus an agterskot amount of R2 500 000, payable in cash. The aggregate purchase
price shall be apportioned as to R5 000 000 to the Sale Claims and the balance as to the Sale Shares.
The base purchase price is payable on the Completion Date and the agterskot amount is payable subsequent to the
first anniversary of the Completion Date following the determination of the consolidated revenue of the
Tractionel Group for the period between the Completion Date and the first anniversary of the Completion Date
being not less than R300 000 000.
The Transaction agreement provides for undertakings, warranties and indemnities which are normal for a
transaction of this nature.
4. Financial information
As at 31 December 2020 the value of net assets that are the subject of the Transaction is negative R 128 380 865
and the loss attributable to the net assets that are the subject of the Transaction for the twelve months ended
31 December 2020 was (R 43 158 223).
The above financial information has been extracted from the management accounts of Tractionel Group for the
12 month period ended 31 December 2020 which were prepared in terms of the Tractionel Group’s accounting
policies and International Financial Reporting Standards. CIG is satisfied with the quality of these management
accounts for the purposes of this announcement.
5. Categorisation
The Transaction constitutes a category 2 transaction in terms of the JSE Listings Requirements and accordingly
does not require shareholder approval.
22 February 2021
Sponsor
Java Capital
Corporate advisor
BSM Advisory Proprietary Limited
Date: 22-02-2021 04:50:00
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