Metair, the JSE-listed automotive component and energy storage group, has made good progress in its strategy to diversify geographically and in its products, CEO Paul O’ Flaherty said yesterday.
The group yesterday announced the finalisation of the AutoZone acquisition and it also provided updates on the disposal of the battery manufacturer in Turkey, Mutlu Akü, as well as its debt restructuring.
All necessary approvals, including those from South African competition authorities and lenders, had been obtained for the acquisition of AutoZone.
“This acquisition is pivotal for Metair. It not only enhances our strategic position within the automotive sector, but also aligns perfectly with the growing opportunities within the South African used vehicle market and the expanding aftermarket landscape,” O’Flaherty said.
“Through this acquisition, we are well-equipped to elevate our automotive aftermarket businesses across Africa.”
The acquisition, effective December 13, 2024, included a nominal consideration for the shares and a total of R278.5m. Of this amount, R188.5m was payable to ABSA to settle ABSA’s secured claim, R15m to settle pre-commencement unsecured creditors, and R75m to fund AutoZone working capital requirements.
Meanwhile, the sale of the Mutlu Group to Quexco Incorporated had received the requisite shareholder approvals, and the Turkish Competition Board confirmed that no further consent was necessary.
O’ Flaherty said economic conditions remained challenging, but good progress was being made with the fulfilment of the remaining condition, the execution by the relevant Mutlu Group companies of a new financing agreement with Turkish banks. Transaction closing was expected before the end of this month.
The $110m disposal price was subject to customary adjustments based on Mutlu Group’s net debt and working capital amounts.
Mutlu Group’s debt and accounts payable had increased substantially since September as a result of the requirement to fund operations in the continued challenging hyper-inflationary and high-interest rate environment.
“It is currently expected net proceeds of $5m will be realised,” said O’Flaherty.
“Owing to Turkey’s rising interest rates and hyper-inflationary pressures, the final consideration is lower than expected; however, this transaction has always been critical for Metair’s strategic turnaround,” he said.
Mutlu Akü had accounted for a substantial 73% of Metair’s interest costs and 23% of Metair’s net debt for the six months to June 30, 2024.
“This move allows us to mitigate and deleverage financial risks and sharpen the focus on our growth and diversification strategy in the mobility sector," said O’Flaherty.
Metair was actively deleveraging - debt stood at R5.5 billion as of June 30, 2024. The board, supported by external lenders, had approved a temporary restructuring of Metair’s debt through an extension of the existing bridge facility to facilitate debt optimisation and to support upcoming financial obligations.
The bridge facility extension will redeem the outstanding preference shares, fund the AutoZone acquisition, and further rebalance shareholder loans in Hesto. The board anticipated presenting a comprehensive capital restructuring plan by March 31, 2025.
Metair’s share price had slipped 285% to R10.57 on the JSE by late yesterday afternoon.
BUSINESS REPORT