Dawn keen on disposal of 49% stake with shareholders

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.