JSE-listed Imperial Holdings has reached an agreement to dispose of the group’s interests in industrial equipment importer and distributor Goscor to the current management and minority acquirers of Goscor for R1.03-billion, which included the discharge of shareholder loans of R730-million.
The deal would see Imperial offloading 75% of the issued share capital of Uvundlu Investments, held by Imperial’s 90%-owned subsidiary Associated Motor Holdings (AMH); 67.5% of the issued share capital of Bobcat Equipment Rental, held by Imperial; 67.5% of the issued share capital of Bobcat Equipment South Africa, held by Imperial; and 42.1% of the issued share capital of Goscor Cleaning Equipment, held by AMH.
Goscor delivered revenue of R1.47-billion in the financial year ended June 30 and had a net asset value of R249-million at the end of June.
Consistent with its espoused strategy to dispose of noncore and strategically misaligned assets, Imperial said it had determined that the import and distribution of industrial equipment and the associated funding requirements of a growing rental book, were inconsistent with Imperial’s sectoral growth and capital allocation objectives.
It had, therefore, decided to dispose of its interests in Goscor.
The purchase consideration would be settled in cash upon fulfilment of the conditions precedent, while proceeds from the deal would be used to reduce debt until redeployed in accordance with the group’s strategic and investment criteria.
The proposed transaction remained subject to approval by the competition authorities.
ANNUAL GENERAL MEETING
Meanwhile, in a statement delivered at Imperial's annual general meeting, CEO Mark Lamberti said the group would continue to dispose of noncore, underperforming or low-return-on-effort assets.
The company had sold its stake in Regent Group and was also selling its 65% interest in Neska.
“We will invest capital in South Africa to maintain the quality of our assets and our market leadership in logistics and motor vehicles.
“We will [also] invest capital in the rest of Africa, primarily to achieve our 2020 objective for the revenue and profits generated by logistics in that region to equal that of our South African logistics business and, secondarily, to expand our vehicles and related businesses in the region,” Lamberti told shareholders.
The company planned to invest capital generated from operations and from divestments to grow its businesses beyond the continent, but with an emphasis on logistics.
He further reported that, with 63% of revenues generated in South Africa, 24% in advanced Europe and 10% in sub-Saharan Africa, Imperial remained affected by challenging global and local economic conditions.
“Uncontrollable” factors directly influencing Imperial’s businesses in the first quarter of the 2016 financial year were a sharp decline in commodity volumes, subdued consumer goods volumes, currency movements in Africa, low water levels on the Rhine and a 15% decline in the rand/dollar exchange rate, which impacted vehicle sales.
“Imperial’s performance for the three months to September was well ahead of the previous year. However, the general deterioration of the business and sociopolitical environment and various expected second-quarter developments, indicate a reversal of this trend in the second quarter.
“In addition, the effects of the disposals, the precise timing of which is uncertain, will be felt in the second half,” cautioned Lamberti.
The company anticipated single-digit revenue growth and no operating profit growth in continuing operations for the financial year to June 2016.
The company expected to release its results for the first six months of the 2016 financial year on February 23.