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Debt-laden Nampak has sold its crate-making and ancillary plant equipment to Mpact for R40m, as the group aims to reduce its debt pile of more than R5bn.

Nampak, which is now valued at R690m on the JSE, said on Wednesday that the deal would help to reduce its debt, which has seen the group’s share price plunge 93% in the past five years.

“The disposal is in line with Nampak’s active portfolio optimisation strategy and will assist Nampak in its focus on the balance of its portfolio and to reduce its interest-bearing debt,”  the company said, adding that the equipment is being sold voetstoots, which means it is at the buyer’s risk.

The company said the book value of the equipment, which consisted of injection moulding and recycling equipment, ancillary equipment and spares, was R4,5m, and the profit on the disposal of the equipment located at Nampak sites in Olifantsfontein, Gauteng; Pinetown, KwaZulu-Natal; and Epping, Western Cape amounted to R35.5m.

The disposal monies are expected to be paid in cash in three tranches with the final amount to be paid in full no later than three months after the delivery date of the equipment.

The move is the latest in Nampak’s bid to simplify and optimise operations by addressing non-performing operations and rationalising product offerings.

The group is labouring under a R5.2bn 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 R1bn by June 30, nor was it able to do so by September 30.

However, 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 R1,3bn 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” R2bn rights offer to settle at least R1.35bn in debt owed to banks and to fund an upgrade of one of its beverage lines, which sent its share price nosediving.

After resistance from activist shareholders who argued that the proposed rights offer sum was too big and would dilute share values markedly if executed at the prevailing share price, in mid-January Nampak announced a reduction in the size of its proposed rights offer from as much as R2bn to no more than R1.5bn.

Shareholders were still dissatisfied and the group was then forced to postpone its rights offer after resistant shareholders purportedly representing 30% of Nampak’s issued shares asked for more details on Nampak’s turnaround plans after many years of underperformance.

Nampak appointed Metis Strategic Advisors to advise the board and negotiate an equitable new funding package with lenders. Similarly, the lenders providing the revolving credit facility, term loans and the US private placement funding appointed their own debt advisers to facilitate the process of reaching a consensus on the rights offer.

Nampak is scheduled to host a pre-closed-period conference call on Thursday, March 30.

Nampak shares, which were first listed in 1969, were unmoved at R1 in afternoon trade, having slipped more than 3% since the start of 2023.

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