Aveng’s sale of Trident Steel a ‘major milestone’

The sale by JSE-listed construction and engineering group Aveng of its Trident Steel business for R700 million as a going concern is a major milestone in the turnaround of the group, says Aveng CEO Sean Flanagan.

This follows Aveng announcing that it signed an agreement on 3 October to sell the business to Trident Steel Africa (TSA), a new company formed specifically for the acquisition.

TSA is funded by a consortium of local and US private capital providers, including US-based private equity firm Ambassador Enterprises LLC; Joseph Investments Pty Ltd; Arbor Capital Investments Pty Ltd; and Trident Steel’s management.

Flanagan said Trident Steel was sold for R700 million, but the group will also receive R264 million, which represents the cash portion from the business, and a ticking fee of R7.45 million per month payable by the purchaser on or before the closing date.

He said the proceeds from the transaction will be used to settle the remaining R406 million South Africa debt currently outstanding.

Some of the proceeds will go towards helping its mining business Moolmans to renew its equipment fleet and to focus on the bottom line of its performance and its Australian subsidiary McConnell Dowell, which has grown its order book in recent years.

“Our focus is to continuously improve the quality of our earnings, the size of our order book and our margins, and generate cash – and then we will have happy shareholders,” said Flanagan.

Aveng had external debt of R3 billion when the turnaround strategy for the group was announced in 2017.