Nampak has entered into a sale agreement to transfer its Zimbabwe unit to TSL for $25 million, pending specific conditions. The transaction is part of Nampak’s asset disposal plan due to challenging operational conditions in Zimbabwe. TSL is obliged to make a mandatory offer to remaining shareholders, with Nampak focusing on cost-containment strategies to navigate the economic downturn that has led to significant revenue declines.
Nampak has finalized an agreement to sell its Zimbabwean unit to TSL, a logistics and processing firm based in Harare. This transfer, involving a 51.43% stake, remains contingent upon several suspensive conditions. A complete announcement is anticipated in the coming weeks, detailing the finalized transaction valued at $25 million.
In line with regulatory requirements, TSL is mandated to extend an offer to Nampak Zimbabwe’s remaining shareholders. TSL has confirmed its ability to execute this Mandatory Offer in a timely manner, which may be fulfilled through cash or a share exchange using its own shares. The execution of the mandatory offer will proceed independently, without Nampak’s involvement.
The decision to divest from the Zimbabwean operations is part of Nampak’s broader asset disposal strategy. Nampak Zimbabwe is actively implementing cost-control measures to adapt to adverse operating conditions exacerbated by recent policy changes and unstable currency.
John van Gend, managing director of Nampak Zimbabwe, acknowledged that the operating climate is complicated and exacerbated by regulatory shifts and currency volatility. The Reserve Bank of Zimbabwe’s recent directive for financial reporting in the local currency, despite Nampak’s shift to US dollar reporting, raises timing concerns for corporate disclosures.
Van Gend emphasized the need for the Zimbabwean government to take decisive actions to mitigate risks of company closures and layoffs, which have intensified recently. Nampak Zimbabwe’s current focus on cost-containment aims to safeguard profit margins amid economic challenges.
The firm experienced a decline in demand for packaging materials, influenced by stiff competition and supply chain disruptions due to civil unrest in Mozambique. Delays in raw material deliveries from Beira Port impacted their operations, particularly during the festive period.
The broader economic struggles in Zimbabwe threaten demand as the retail sector contends with notable business closures. Nampak Zimbabwe reported a significant decrease in revenues of 23% in US Dollar terms, while their trading profit plummeted by 56%, reflecting the lower demand across all business segments. This downturn correlates with recent currency fluctuations and a steep depreciation of the local currency.
In conclusion, Nampak has agreed to sell its Zimbabwe operation to TSL amid challenging economic conditions characterized by currency instability and regulatory changes. TSL’s forthcoming mandatory offer is a key step in compliance with business regulations. Nampak Zimbabwe is prioritizing cost containment to protect profitability, facing tough competition and declining revenues due to adverse market conditions. These factors underscore the complex economic landscape in Zimbabwe, which poses significant challenges to business sustainability.
Original Source: www.newzimbabwe.com
