SOUTH AFRICA – JSE-listed packaging group Nampak has, through its Nampak Products subsidiary, entered into a sale of equipment agreement with Mpact’s indirect subsidiary Mpact Plastic Containers Castleview (Mpact PCC).
Nampak has been winding down and closing its crates manufacturing business and intends to sell equipment that is no longer used.
The company, which is now valued at R690 million (US$38.06m) on the JSE, has been actively optimizing its portfolio and reducing interest-bearing debt, which it intends to do with the disposal proceeds.
“The disposal is in line with Nampak’s active portfolio optimization strategy and will assist Nampak in its focus on the balance of its portfolio and to reduce its interest-bearing debt,” said the company in a statement.
The equipment in question will be sold for R40 million (US$2.21m) and is located at Nampak sites in Olifantsfontein, Gauteng; Pinetown, KwaZulu-Natal; and Epping, in the Western Cape.
The company said the book value of the equipment, which consisted of injection molding and recycling equipment, ancillary equipment and spares, was R4.5 million (US$0.25m), and the profit on the disposal amounted to R35.5 million (US$1.96m).
Mpact PCC will pay the consideration in three tranches, the first of which will comprise 50% of the consideration upon delivery of the equipment. The second and third tranches will comprise 25% of the consideration, respectively.
The move is the latest in Nampak’s bid to simplify and optimize operations by addressing non-performing operations and rationalizing product offerings.
The group is laboring under an R5.2 billion (US$286.84m) debt pile after its ill-fated expansion into the rest of Africa.
The 2020 disposals of Nampak Glass and Nigerian Cartons have helped the group to settle the dollar-denominated debt.
The Johannesburg-based group has also been working to complete the sale of Nampak Tubes in 2023.
Owing to a challenging macroeconomic environment, the disposal of assets at fair value proved difficult in 2022 and the group did not meet its target to reduce net interest-bearing debt by R1 billion (US$55.16m) by June 30, nor was it able to do so by September 30.
Nampak said it successfully renegotiated the terms of its funding arrangements and covenant threshold levels, extending the debt maturity dates from 1 April 2023 and 25 September 2023 to 31 December 2023, which improved the structure of its statement of financial position and provided relief to short-term liquidity, giving it time to consider all alternatives to strengthen the capital structure and reduce net interest-bearing debt.
This is subject to a successful rights offer to raise a minimum in net proceeds of R1.3 billion (US$71.71m) to be used to repay the net interest-bearing debt by 31 March 2023.
As a part of a turnaround plan that was approved in September 2022, the group in December proposed an “up to” R2 billion (US$110.32m) rights offer to settle at least R1.35 billion (US$74.47m) in debt owed to banks and to fund an upgrade of one of its beverage lines, which sent its share price nosediving.
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