JSE-listed construction company Group Five will sell its 50% interest in Group Five Pipe to LB Pipes for R80-million.
“Although the manufacturing cluster remains a strong performer within the group and contributes solid earnings and cash flow, it is regarded as a noncore operation,” Group Five explained.
Group Five Pipe manufactures large bore spiral-welded steel pipes mainly for water transport systems.
LB is owned 51% by a black industrialist, 26% by Marine Civils and 23% by the Industrial Development Corporation (IDC).
In addition to the sale proceeds, Group Five will receive a cash distribution of at least R25-million, being its share of the cash available in the joint venture in excess of the minimum working capital required.
The implementation of the transaction is subject to the fulfilment by December 15, or the waiver of some material conditions precedent.