Dawn keen on dis­posal of 49% stake with share­hold­ers

The Star Early Edition - - COMPANIES - Sandile Mchunu

DISTRI­BU­TION and Ware­hous­ing Net­work Lim­ited (Dawn) has en­tered into a non-bind­ing mem­o­ran­dum of un­der­stand­ing with the con­trol­ling share­hold­ers of Grohe Dawn Watertech (GDW) for the po­ten­tial dis­posal of its 49 per­cent stake in the com­pany.

Dawn warned its share­hold­ers that if the dis­posal was con­cluded, it would have a ma­te­rial ef­fect on the price of the com­pany’s se­cu­ri­ties. The com­pa­nies are yet to agree on a price for this pro­posed trans­ac­tion.

“There is no cer­tainty that the ne­go­ti­a­tions will lead to de­fin­i­tive and bind­ing agree­ments and there­fore no cer­tainty that the trans­ac­tion will ul­ti­mately be con­cluded and im­ple­mented,” the group said.

Dawn man­u­fac­tures and dis­trib­utes qual­ity branded hard­ware, sanitaryware, plumb­ing, kitchen, engi­neer­ing and civil prod­ucts through an in­ter­na­tional, strate­gi­cally po­si­tioned branch net­work in South Africa and se­lected coun­tries in the rest of Africa and Mau­ri­tius. The group has two main op­er­at­ing seg­ments: build­ing and in­fra­struc­ture, which are sup­ported by the so­lu­tions seg­ment. The group said both par­ties wanted Dawn to re­main the long-term mas­ter dis­trib­u­tor for the GDW prod­uct range in south­ern Africa.

“It is the view of the Dawn board that this trans­ac­tion would be a pos­i­tive step in the turn­around process of the group,” the com­pany said.

In March, Dawn an­nounced it was look­ing to raise R358m and it took up a rights of­fer in which it planned to of­fer 358 mil­lion rights-of­fer shares at R1 in the ra­tio of 147.83904 rights-of­fer shares for ev­ery 100 ex­ist­ing Dawn or­di­nary shares held on March 24, the record date for the rights of­fer.

The com­pany said the rights- of­fer is­sue price rep­re­sented a 53.1 per­cent dis­count to the clos­ing price on March 10. The rights of­fer closed on April 7 and was fully sub­scribed, with the R358m raised.

The com­pany said the pur­pose of the rights of­fer was to as­sist the com­pany to in­crease the avail­able work­ing cap­i­tal fa­cil­i­ties and re­pay R75m of its re­volv­ing-credit fa­cil­ity.

In the re­sults for the six months to end Septem­ber, the group re­ported an op­er­at­ing loss of R338.1m as a re­sult of the slow­down in govern­ment spend­ing, low lev­els of build­ing ac­tiv­ity and con­sumers be­ing un­der fi­nan­cial pres­sure. A year be­fore, the group re­ported a R90.18m profit. Dawn shares were un­changed at 90 cents at the close on the JSE.

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