South African chemicals, explosives and property group AECI has announced that it will sell the nylon light decitex (NLD) business of SANS Fibres to a consortium comprising of the management of SANS, a workers’ trust and the Industrial Development Corporation (IDC).
The sale entails the entire fibres business situated at Bellville in the Western Cape and at Stoneville, North Carolina, USA, which have a combined annual turnover of about R600-million and employ 600 people in total.
The purchase will be financed largely by the IDC, which will provide debt and equity finance and will hold a 15% direct shareholding in the company, as the corporation sees the investment as a good financial prospect that also promotes black economic empowerment, while also maintaining jobs.
“Importantly, in excess of 25% of the company’s equity will be beneficially-owned by BEE shareholders,” said SANS Fibres MD Brad Page in a company statement last week.
Page said the transaction would result in the company having empowered status in terms of the Department of Trade and Industry’s codes of practice on broad-based BEE, as all employees in the South African nylon LDI business would now have a stake in the company.
AECI chief executive Graham Edwards also hailed the transaction, as the group had originally planned to shut down the LDI business, with the view that it did not fit with the group’s long-term strategy of becoming a supplier of speciality products and services to the mining and manufacturing sectors.
“We are pleased that, via Page and his consortium, jobs will be saved and customers will continue to be supplied with quality product nylon LDI from a business that is recognised as a world leader in sewing thread and other niche weaving markets,” Edwards said.
The sale is subject to a number of conditions precedent including detailed due diligence, the conclusion of acceptable binding funding agreements with the IDC, board approvals, relevant regulatory approvals, the conclusion of a sale agreement and the ability to satisfactorily separate the LDI business from the other business at Bellville.
“Because of management’s involvement, it is likely that the sale will be deemed a ‘small related party transaction’ in terms of the JSE listings requirements and is subject to a fair opinion from an independent expert,” AECI said. “The full terms of the sale and the independent opinion will be announced in due course.”