Nampak Group is set to divest its Liquid Cartons division in South Africa for R450 million as part of its broader strategy to reduce its R2.6 billion debt. The sale includes the transfer of Nampak Zambia and Nampak Malawi shares to a consortium led by Corvest 15 and Dlondlobala Capital, pending shareholder and regulatory consent.
This move aligns with Nampak’s objective to transition from a diversified conglomerate to a more streamlined entity focused on select packaging operations with higher earnings quality, lower risk, and better cash flow.
Valued at R1.3 billion on the Johannesburg Stock Exchange (JSE), Nampak anticipates this transaction will alleviate its financial strain, evidenced by a 93% drop in share price over five years.
Nampak CEO Phil Roux has communicated the necessity of raising R2.7 billion through asset sales within 18 months to address the company’s interest-bearing debt, as stipulated in their latest funding agreement.
The Liquid Cartons business, a distinct unit within Nampak Products, produces and distributes paper-based packaging for liquids. This includes brands like Pure-Pak and Conipak in South Africa. Additionally, Nampak Zambia and Nampak Malawi are involved in the manufacturing and distribution of conical cartons, with the latter also marketing tobacco cases and corrugated cartons in Malawi on behalf of Nampak Zimbabwe.
The net assets involved in the sale were valued at R399 million as of September’s end, with the audited post-tax profits of the assets being R104 million.
The deal will also convert Nampak Group executives Raymond Dube and Shaun du Plessis into shareholders of the newly sold liquid cartons business.
This disposal is part of Nampak’s ongoing efforts to streamline and enhance its operations by shedding underperforming units and refining its product range, following a challenging period marked by a R5.2 billion debt incurred from its expansion across Africa.
Following a successful rights issue that raised R1 billion from investors in September, Nampak’s shares saw a 3.68% increase, trading at R167 on Tuesday morning.