As part of its efforts to divest of its steel assets, JSE-listed Aveng on Wednesday revealed that its wholly owned subsidiary Aveng Africa had reached an agreement with Kutana Steel stipulating that the latter would acquire a 70% interest in the Steeledale business for R252-million.

Between R93-million and R123-million is payable in cash, with the remainder payable on a deferred basis. Aveng Africa will have the option to divest from the remaining 30% shareholding in the Steeledale business at any time after three years.

The Kutana group of companies is a black-women-owned investment group, with Thoko Mokgosi-Mwantembe at its head.

The proceeds from these transactions will primarily be used to strengthen the balance sheet of the group to support the next phase of Aveng’s growth strategy.

Meanwhile, the company has also entered into a share sale agreement with investment vehicle Royal Bafokeng Holdings (RBH), which will acquire Aveng’s equity interests and loans for a cash consideration of R860-million.

This deal includes Blue Falcon 140 Trading, the project company that owns the 138 MW Gouda wind farm, in the Western Cape, and in which Aveng holds 23%. It also comprises Aveng’s 30% stake in Imvelo Concession Company, a project company that entered a 27-year concession agreement for the design, building, operation and maintenance of the Department of Environmental Affairs campus in Pretoria, as well as its 10.92% interest in N3 Toll Concessions, which is in a 30-year concession agreement with the South African National Roads Agency.

Through the deal, RBH will also acquire Aveng’s 29% interest in Windfall 59 Properties, which owns the 74 MW Northern Cape-based Sishen solar photovoltaic plant, which reached commercial operation in December 2014.

Meanwhile, Aveng expects to report a 45% to 55% improvement in its year-on-year headline loss per share – between 65c apiece and 79c apiece for the year ended June – up from 144.3c in the comparative period.

Headline loss for the year will be between R260-million and R318-million – a marginal improvement on the R578-million loss it reported in 2015.

The company attributed these improvements to an enhanced financial performance from Aveng Grinaker-LTA, which completed lossmaking and noncontributing contracts. Also contributing to the group’s positive performance are an improvement in the ratio of contracts operating at tendered margins, a strong performance in the building business, the resolution of some major commercial claims and a further reduction in fixed operating expenses.

Further, Aveng noted that the realisation of cost savings initiatives previously implemented throughout the group, improved financial performance from Aveng Steel in the second half of the year and fair value gains on the infrastructure investments also contributed to the group’s fiscal performance.

However, it attributed its losses to restructuring expenses, which were incurred to further right-size the group’s overhead structure in response to market conditions. Also contributing to the group’s yearly loss are its underperformance on certain McConnell Dowell contracts, additional expenses on a problematic Aveng Water water contract, contract cancellations and activity reductions for Aveng Mining, and protracted difficult trading conditions in most of the markets in which the group operates.

The basic loss for the year includes the profit on sale of Aveng’s South African property portfolio of R577-million in the first half of the year, partially offset by the impairment of certain steel assets recognised in the second half of the year.