Following a series of capital market transactions, which have helped stabilise Aveng’s precarious balance sheet, the JSE-listed infrastructure group has turned its attention to the disposal, by June 2019, of several noncore businesses, including its well-known constructionbusiness, Grinaker-LTA.
Executive chairperson Eric Diackreports that expressions of interest have been received for all of the companies up for sale, including Trident Steel, Dynamic Fluid Control, Automation & Control Solutions, Duraset, Infraset and Aveng Rail.
Transaction advisers will be appointed on a case-by-case basis and Diack said at least one disposal, besides the R245-million sale of the Jet Park and Vanderbijlpark properties, is imminent.
However, he also indicates that Grinaker-LTA disposal may involve multiple transactions, with potential buyers showing interest in specific units rather than the entire enterprise.
The disposal could also receive something of a tailwind from President Cyril Ramaphosa’s South AfricaInfrastructure Fund, being established as a public-private partnership as part of government’s stimulus and recovery plan. Diack is optimistic that the disposals will yield “multiples” of the R600-million net asset value associated with the businesses held for sale in its accounts for the year ending June 30.
The proceeds will be used primarily to pay down gross debt, which, following a September 25 bond-to-equity conversion, has been reduced to R1.8-billion from R3.3-billion.
However, some of the capital could be deployed to support organic growth initiatives in the two remaining core businesses: Australasian construction group McConnell Dowell and opencastmining specialist Moolmans. Together the two companies employ about half of the Aveng group’s 14 000 staff.
Overall, the Aveng order book, which stands at R17.9-billion, has decreased by 28% since December 31, when it was valued at R25.1-billion.
Nevertheless, Diack says he is the most optimistic he has been for two years about Aveng’s future prospects, arguing that its strengthened capital structure provides a “solid platform” for turning around the group’s fortunes.
He acknowledges, too, that this platform is the result of sacrifices made by shareholders, bondholders and lenders, which enabled the group to complete a R493-million rights issue, pursue the early redemption of R2-billion convertible bond and extend the term of bank debt to 2020.