JSE-listed Blue Label Telecoms is selling its 47.56% interest in Blue Label Mexico to co-shareholder Grupo Bimbo for $11.5-million.
Blue Label will use the proceeds to settle its total parent guarantee obligations of $3.25-million payable to RBL Bank on behalf of Oxigen Services India, as well as $5.375-million as a part payment by The Prepaid Company to Special Purpose Vehicle 2 against its remaining liquidity support obligations of $10-million.
This is in line with Blue Label’s strategy to refocus its efforts on its South African Distribution businesses and to deleverage the business in order to ensure a more robust and liquid balance sheet going forward, the company said in an update.
The outstanding conditions precedent for the transaction to become effective by September 21 include the waiver by a minority shareholder in Blue Label Mexico of its pre-emptive rights and the payment by Blue Label Mexico to Blue Label’s employee secondee of his salary up to September 21.
The total proceeds will be receivable on the effective date; however, in line with Mexican tax legislation, tax is payable on the proceeds of the disposal and, accordingly, the balance of the proceeds receivable will be applied to pay such taxes up to a maximum of such residue.
The value of the net assets comprising the equity accounted investment in Blue Label Mexico as at May 31 amounted to R138-million.
The equity accounted loss after tax attributable to the investment in Blue Label Mexico for the year ended May 31, amounted to R5.8-million.