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MPACT LIMITED - Announcement relating to the disposal of Mpact's Versapak division
2024/08/01 08:00:00Download PDF Stock report
Announcement relating to the disposal of Mpact's Versapak division
MPACT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2004/025229/06)
JSE code: MPT ISIN: ZAE000156501
('the Company' or 'Mpact')
ANNOUNCEMENT RELATING TO THE DISPOSAL OF MPACT'S VERSAPAK
DIVISION
1. Introduction
Mpact is pleased to advise shareholders that on 31 July
2024, the Company, through its subsidiary Mpact Operations
Proprietary Limited (the 'Seller'), entered into a sale of
business agreement (the 'Sale Agreement') with Greenpath
Recycling Proprietary Limited (the 'Purchaser')(a wholly
owned subsidiary of Sinica Manufacturing Proprietary
Limited ('Sinica')), in terms of which the Seller will
dispose of its Versapak business ('Versapak' or the
'Business') to the Purchaser for an amount equal to
R267 747 498 (including VAT at 0%) ('Purchase Price')
(the 'Disposal'). As part of the Disposal, the Purchaser
will be acquiring the Business as a going concern, and the
employees will transfer to the Purchaser in accordance
with section 197 of the Labour Relations Act. The Purchase
Price will be adjusted based on the actual amount of stock
on hand and the value of certain employee liabilities as
at the effective date of the Disposal.
The Disposal excludes all cash, debtors and creditors of
the Business. Also excluded from the Disposal are the two
properties from which the Business operates. The parties
have therefore also entered into two separate lease
agreements in terms of which the Purchaser will lease
these properties (including the respective installed Solar
Equipment and Generator Systems) on market-related terms
(the 'Lease Agreements').
2. Description of the Business
Versapak is a division of Mpact and operates a business
comprising the production of styrene and PET trays and
punnets, as well as vinyl cling film. The Business is
operated from two plants in Paarl, Western Cape, and
Roodekop, Gauteng. The Lease Agreements relate to the two
properties on and from which the Business is operated.
Sinica is a manufacturer and supplier of a range of
plastic packaging products, including polystyrene meal
boxes and trays, vinyl film, and polyamide ethylene vinyl
alcohol vacuum bags. Sinica's products are manufactured at
a facility located in Benoni, Gauteng.
3. Rationale for the Disposal
Following a strategic review in 2021, a decision was taken
by Mpact to sell Versapak pursuant to its ongoing
portfolio optimisation plan. The rationale for the
decision was that the products of Versapak are not fully
aligned with Mpact's strategy. A process to sell the
Business as a going concern then commenced with a number
of interested parties invited to participate in the sale
process. Mpact has since reported the Business as held-
for-sale in accordance with IFRS from the 2021 financial
year and in subsequent financial years.
4. Conditions precedent and effective date
The Disposal is subject to the fulfilment or waiver (to
the extent legally permissible) of the following
conditions precedent (the 'Conditions Precedent'):
• the approval of the Disposal by the South African
competition authorities either unconditionally, or
conditionally on terms and conditions confirmed to be
acceptable to each of the Seller and the Purchaser
(such confirmation not to be unreasonably withheld or
delayed);
• the entry into of the ancillary transaction
agreements including, inter alia, the Lease
Agreements, and such agreements becoming
unconditional in accordance with their terms; and
• the Seller having published the notices required to
be published in relation to the Disposal, in terms of
section 34 of the Insolvency Act.
The effective date of the Disposal is the first day of the
calendar month immediately following the calendar month in
which all of the Conditions Precedent have been fulfilled
or waived. The Company anticipates the effective date to
be in Q4 of 2024, subject to the approval of the
competition authorities having been received timeously.
5. Payment and application of the Purchase Price
The Purchase Price is payable by the Purchaser on the
effective date of the Disposal. The Purchaser is currently
awaiting final funding approval from its debt funder,
however, this approval is not a condition precedent to the
Disposal as Sinica has guaranteed all obligations of the
Purchaser in terms of the Sale Agreement, including the
payment of the Purchase Price on the effective date. The
Disposal proceeds will be applied towards the settlement
of debt by Mpact.
6. Warranties and other significant terms of the Sale
Agreement
The Sale Agreement contains warranties, representations
and indemnities given by the Seller in favour of the
Purchaser, and by the Purchaser (and Sinica) in favour of
the Seller, which are customary for a transaction of this
nature.
7. Financial information
The value of the net assets comprising the assets that are
the subject of the Disposal as at 31 December 2023, being
the date of the last audited annual financial statements
of the Seller was R239 278 483.
The audited profits before tax attributable to the assets
that are the subject of the Disposal was R175 686 174,
based on the audited annual financial statements of the
Seller for the year ended 31 December 2023, which were
prepared in terms of IFRS. The profit before tax includes
a R74.0 million fair value gain recognised on the
remeasurement of plant and equipment.
8. Categorisation of the Disposal
The Disposal (including any adjustments referred to in
paragraph 1 above) constitutes a category 2 transaction as
outlined in paragraph 9.5(a) of the JSE Listing
Requirements.
Melrose Arch
1 August 2024
Sponsor
The Standard Bank of South Africa Limited
Date: 01-08-2024 08:00:00
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