A Bevcan storage facility in Rosslyn. Picture: Liza van Deventer
Packaging group Nampak’s share price shot up by 7.34% on Friday after it announced the conclusion of the sale of its subsidiary Bevcan Nigeria for R1.27 billion.
On June 28 last year, the group said shareholders had at a meeting approved the disposal of the share capital of Nampak Bevcan Nigeria and the loans advanced by Nampak Nigeria Holdings to Bevcan Nigeria. The business was being sold to Alucan Investment, a private company incorporated in Singapore.
“This is a material milestone in de-leveraging the group's financial position, a reduction in the group's historic risk profile, and a positive step change to the leverage ratio. This allows for the refocusing of the group's efforts on the core Metals Group, and in so doing, unlocking further shareholder value,” Nampak’s directors said on Friday in a notice.
Nampak's share price traded at R453.43 late on Friday afternoon on the JSE, having climbed sharply by about 145% over 12 months from R185 as the group steadily met various targets of a restructuring started in 2023. The share ended the day at R449.39.
In September, shareholders were advised that the merger application regarding the disposal had been submitted to The Federal Competition and Consumer Protection Commission in Nigeria for assessment.
“Nampak is pleased to advise shareholders all conditions precedent and regulatory approvals required under the share purchase agreement concerning the disposal have now been fulfilled, and consequently, the transaction has been concluded,” it said.
On the effective date of disposal, January 31, 2025, $58.2 million (about R1.08bn) of the anticipated final purchase price of $68.2m (R1.27bn) - excluding cash held at Bevcan Nigeria on completion - is payable in cash.
Nampak’s Nigeria operations were one of the main reasons why the group’s debt levels increased to the extent that the group required a massive restructuring to restore the financial position and long-term sustainability, due to foreign exchange-related losses and under-performance from the Nigeria operations.
The payment of $58.2m had been confirmed. The remaining balance of about $10m would be payable with interest by February 7, 2025, subject to a final working capital reconciliation.
According to Nampak’s annual report released in December, its restructuring initiatives during the year to September 30, 2024, included portfolio optimisation, a focus on transformational initiatives, a “cultural evolution,” a new business operating model, cost reductions, and effective revenue management.
In that year, it reported a massive turnaround to a R626m profit versus a R2.2bn loss the year before.
“Our business going forward will be focused on producing aluminium and tin-plate cans. In South Africa and Angola, we are the largest manufacturer of beverage cans. We have substantial positions in other metal packaging in South Africa and are the only producer of two-piece tin-plate cans and aluminium monobloc aerosol cans in our home market,” CEO Phil Roux and chairman Andre van der Veen said in the annual report.
The group said a trend to larger beverage cans remained robust. The rise in RTD (ready-to-drink) beverages and the shift away from single-use plastics was supporting demand for beverage cans. Nampak would relocate a spare Angolan production line to South Africa to meet expected demand.
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