Aveng sells major interests, narrows its losses
AVENG rose 5.19 percent yesterday after it reported a narrowing of its loss for the year to June and the sale of its interest in four major infrastructure investments and 70 percent of its steel reinforcing and mesh business for R1.1 billion.
Shares closed at R4.26 after hitting a year-low of R1.88 in December.
Aveng expected its headline loss for the year to be between R260 million and R318m compared with the headline loss of R578m in the previous year. This translates into a between 45 percent and 55 percent improvement in headline loss a share to between 65c and 79c from the 144.3c loss in the previous year.
The group reported the sale of Aveng Capital Partners’ equity interests in four major infrastructure investments for R860m cash to Royal Bafokeng Holdings and the sale of a 70 percent interest in Aveng Steeldale to black womanowned investment group Kutana Steel for about R252m.
Wholly-owned subsidiary Aveng Africa will have the option to divest from the remaining 30 percent shareholding in the Aveng Steeldale business at any time after three years.
Thoko Mokgosi-Mwantembe, an independent non-executive director of Aveng and other major firms, is the chief executive of the Kutana group of companies.
Equity interests
The equity interests managed by Aveng Capital Partners that have been sold include its 29 percent interest and shareholder loan in Blue Falcon 140 Trading, which owns the 138-megawatt Gouda wind farm, and its 30 percent interest and shareholder loan in Imvelo Concession Company, which entered into a 27-year concession agreement for the design, building and operation and maintenance of the Department of Environmental Affairs campus in Pretoria.
The transaction also includes Aveng Capital Partners’ 10.92 percent interest in N3 Toll Concessions, which entered into a 30-year concession agreement with the SA Road Agency in 1999, and its 29 percent interest and shareholder loan in Windfall 59 Propeties, which owns the 74MW Sishen Solar Photovoltaic Plan.
Kobus Verster, the chief executive of Aveng, said these investments had reached appropriate maturity. “Aveng Capital Partners will continue to pursue project development opportunities for the group.”
Albertinah Kekana, the chief executive of Royal Bafokeng Holdings, said this agreement was in line with their diversification strategy and represented their “longterm investment approach”.
Shareholder approval is required for these transactions, with the proceeds used primarily to strengthen Aveng’s balance sheet to support and position the group for growth.
An update on Aveng’s planned divestiture from Aveng Trident Steel and Aveng Steel Manufacturing will be provided at the group’s results presentation later this month.
The group attributed the material improvement in the financial performance to a number of factors including: an improved financial performance from Aveng Grinaker-LTA; the realisation of previously implemented cost savings initiatives; an improved financial performance by Aveng Steel; and fair value gains on the infrastructure investments.
However, these were partially offset by restructuring expenses incurred to further right-size the group’s overhead structure, underperformance on certain contracts in McConnell Dowell, additional expenses on a problematic water contract and contract cancellations and activity reductions in Aveng Mining.