ENX Group, a provider of branded equipment, fleet and petrochemical products and services, has reported its first set of results for the six months to February 2017, saying it now has the foundations of a much larger industrial business.
Formerly listed as industrial supplies group Austro, ENX swallowed up the much larger Eqstra group in late 2016 for R7.8bn. This separated out Eqstra’s better fleet management business from its unprofitable mining operations.
ENX said its first set of interims showed the effect of converting loans into equity, its recapitalisation plans and the monetising of assets into cash flows. It would now unbundle the contract mining and associated mining vehicle businesses that were once part of Eqstra.
Former Eqstra CEO and now ENX CEO Jannie Serfontein said on Monday that it was critical to divorce investment in the contract mining business, now renamed Extract, ahead of its sale and a subsequent dividend payout to ENX shareholders. He said this would be worth R5.75 per share and would be paid out after the sale in September.
“In respect of the Extract recapitalisation and unbundling transaction … the ENX board wishes to support Extract’s repositioning to establish a new funding model for future diverse resource investments,” he said.
ENX would do this by converting R2.1bn of debt owed by Extract’s wholly owned subsidiary, MCC, into new shares in Extract. These shares, together with about 20% of existing ordinary shares held by ENX in Extract, would then be unbundled to ENX shareholders at about 29.5 Extract shares for every ENX share.
“Our business model and current asset portfolio have defensive characteristics given the annuity-generating nature of our assets, strong market positions, brand partnerships and long-term client commitments,” Serfontein said.
“We have an experienced management team who will maintain … strong relationships … drive cost efficiencies and be alert to opportunities to grow.”