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Disposal of Nampak‘s Glass Business and withdrawal of cautionary
Nampak Limited
(Incorporated in the Republic of South Africa)
Registration Number: 1968/008070/06
Share Code: NPK
ISIN: ZAE 000071676
(“Nampak” or the “Company”)
DISPOSAL OF NAMPAK‘S GLASS BUSINESS AND WITHDRAWAL OF CAUTIONARY
1.Introduction
Further to the various announcements released on SENS, the latest being 23
August 2019, shareholders are advised that Nampak, via its wholly-owned
subsidiary, Nampak Products Limited (“Nampak Products”), has entered into
a sale of business agreement (“Disposal Agreement”) on 26 September 2019
with Isanti Glass 1 Proprietary Limited (“Isanti” or the “Purchaser”),
Kwande Capital Proprietary Limited (“Kwande”) and SABSA Holdings
Proprietary Limited (“SABSA”) to dispose of Nampak Glass which includes the
Property (as defined in paragraph 4 below) (“Nampak Glass” or the “Business”)
as a going concern and on a cash-free, debt-free basis (“Disposal”).
2.Rationale
The Disposal is in line with Nampak’s active portfolio optimisation strategy
and will allow Nampak to focus on the balance of its portfolio and to reduce
its interest bearing debt.
3.About the Purchaser, Kwande and SABSA
The Purchaser is currently 60% owned by Kwande and 40% owned by SABSA.
Kwande is a black owned and managed investment company established in 2010,
with a primary focus on investing in companies with high growth potential
in strategic sectors, primarily in the manufacturing and oil and gas sectors.
SABSA is the holding company of The South African Breweries Proprietary
Limited and a wholly owned indirect subsidiary of Anheuser-Busch InBev SA/NV
(“AB InBev”). AB InBev is the leading global beer player and one of the
largest glass manufacturers in the world. AB InBev has a primary listing
in Belgium (Euronext) and secondary listings in South Africa (JSE) and Mexico
(MEXBOL).
4.About Nampak Glass
Nampak Glass is one of two primary glass container manufacturers which
service the glass container industry in South Africa and has been in
operation since 1984. The Business supplies many of the key players in the
South African food and beverage industry. Nampak Glass operates three
furnaces which supply nine forming lines at its site in Roodekop, southeast
of Johannesburg, Gauteng (“Property”), and operates its own cullet sorting
and processing plant on the Property.
5.Key terms of the Disposal
5.1. Sale of Business
Nampak Glass will be sold as a going concern including certain
liabilities (accounts payable, employee related liabilities (other
than liabilities for variable pay, which will be retained by Nampak)
and the liabilities under the contracts relating exclusively to the
Business) but excluding cash and cash equivalents (“Purchased
Business”).
5.2. The consideration
The consideration is estimated to be R1.5 billion depending on the net
working capital of the Business which fluctuates through the year, and
is payable in cash. The consideration consists of R992
million for the Property, plant and equipment plus the value
attributable to the agreed levels of net working capital of the Business
at the closing date (which is estimated to be R500 million), and is
subject to certain adjustments set out in the Disposal Agreement
(including for certain agreed capital expenditure).
The proceeds from the Disposal shall be used primarily to reduce the
Company’s interest bearing debt.
There is no vendor financing facilitating the Disposal.
5.3. Warranties and other terms and conditions
The Disposal Agreement contains representations, indemnities and
warranties by Nampak Products which are standard for transactions of
this nature.
The Disposal Agreement can only be terminated or cancelled in limited,
material circumstances.
Nampak Products has undertaken not to dispose of the whole or a major
part of its other assets for a period of 12 months from the closing
date.
6.Value of and losses attributable to the net assets that are the subject
of the Disposal
The value of the net assets and the losses attributable to the net assets
that are the subject of the Disposal amounts to R1,835 million and
R105 million respectively, as per the Company’s interim financial results
for the 6-month period ended 31 March 2019.
The interim financial results were prepared in terms of the Company’s
accounting policies.
The financial information has not been reviewed or reported on by Nampak
group’s external auditors.
7.Conditions precedent
The Disposal is subject to the fulfilment of conditions precedent,
including:
7.1. the approval of the Disposal by the South African Competition
Authorities;
7.2. by 15 November 2019, the Purchaser’s funding arrangements become
unconditional save for conditions that, in accordance with normal
market practice, remain in place until closing;
7.3. the conclusion of a lease agreement between the owner of a warehouse
(which is utilised by the Business and situated adjacent to the
Property) and the Purchaser; and
7.4. securing the transfer to the Purchaser of certain material licences
and permits.
8.Categorisation
The Disposal is categorised as a Category 2 transaction in terms of the JSE
Listings Requirements and accordingly no shareholder approval is required.
9.Withdrawal of cautionary
The cautionary announcement dated 23 August 2019 is withdrawn.
Bryanston
27 September 2019
Sponsor: UBS South Africa (Pty) Ltd
Investment bank, corporate advisor and transaction sponsor:
Nedbank Corporate and Investment Banking, a division of Nedbank Limited
Legal adviser:ENSafrica
Date: 27/09/2019 08:00:00
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