Nampak has agreed to sell its Zimbabwean unit to TSL Limited for $25 million, pending certain conditions. This sale is part of Nampak’s asset disposal strategy amid challenging economic conditions in Zimbabwe. TSL will make a mandatory offer to remaining shareholders as part of this transaction. Nampak Zimbabwe faces considerable operational challenges, including currency instability and declining demand.
Nampak Limited has finalized agreements to sell its Zimbabwean unit, Nampak Zimbabwe, to TSL Limited, a logistics company based in Harare, with the transaction awaiting suspensive conditions. This sale involves the transfer of a 51.43% shareholding for a consideration of $25 million. According to Nampak Zimbabwe’s statement, an official announcement regarding the complete disposal is anticipated in the ensuing weeks.
As per regulatory requirements, TSL must extend an offer to the remaining shareholders of Nampak Zimbabwe. TSL has confirmed its capability to execute this mandatory offer within the stipulated timelines, utilizing either cash or its shares for settlement. Furthermore, Nampak has clarified that it will not be involved in the subsequent mandatory offer process initiated by TSL.
This divestment aligns with Nampak’s broader asset disposal plan and is primarily driven by the challenging economic conditions in Zimbabwe. Nampak Zimbabwe is currently prioritizing cost-containment strategies to bolster its margins and enhance profitability amidst adverse currency fluctuations and policy changes that have complicated its operational landscape.
John van Gend, the Managing Director of Nampak Zimbabwe, highlighted the complexity of the current operating environment, impacted by significant policy shifts and currency instability. Recent currency policy alterations are anticipated to affect the timing of company financial reporting. Notably, while Nampak has shifted to US dollar-based financial reporting, the Reserve Bank of Zimbabwe mandates the use of local currency for reporting purposes.
To navigate the ongoing economic downturn, Nampak Zimbabwe is focused on preserving profitability despite a decline in demand for packaging materials, attributed to intensified competition and supply chain disruptions caused by civil unrest in Mozambique. Van Gend noted that the delivery capabilities were adversely impacted during the festive season due to delays experienced in raw material shipments.
The economic climate in Zimbabwe is projected to further affect market demand, with notable closures in the wholesale and retail sectors posing risks to business sustainability. During the last quarter, Nampak Zimbabwe recorded a 23% decrease in revenues and a 56% decline in trading profit, as revenues were adversely affected by reduced demand across all business segments. The period also witnessed significant exchange rate fluctuations due to the local currency’s depreciation.
Nampak Zimbabwe’s sale to TSL Limited marks a crucial step in the company’s asset disposal strategy amidst a challenging economic environment marked by currency instability and fluctuating demand. The transaction, while productive in generating capital, reveals broader systemic issues affecting operational sustainability in Zimbabwe, pressing Nampak Zimbabwe to implement strict cost-containment measures. The future of the company remains closely tied to the region’s economic stabilization efforts and government interventions aimed at alleviating operational hardships.
Original Source: www.newzimbabwe.com
