Huge support for Dawn to sell GDWT to Lixil

DISTRIBUTION and Warehousing Network (Dawn), the JSE-listed plumbing and hardware brands manufacturer and distributor, has received overwhelming support from five shareholders for the sale of its 49 percent interest in Grohe Dawn Watertech (GDWT) to listed Japan-based Lixil Group Corporation for R324.5 million.

The company said yesterday that it had obtained written undertakings from five shareholders holding 72.5 percent of the total Dawn shares in issue to vote in favour of the transaction at the general meeting to be held to obtain shareholder approval for the transaction.

Dawn said further details about these written undertakings would be included in the circular to shareholders containing the full details of the transaction, and incorporating a notice convening the general meeting, which would be posted to shareholders in due course.

The sale of Dawn’s 49 percent interest in GDWT to the Lixil Group was announced last week.

However, Dawn will remain a long-term master distributor of the GDWT product range in South Africa and 12 countries in sub-Saharan Africa, following the completion of the transaction.

Edwin Hewitt, the chief executive of Dawn, said last week that they had achieved the best of both worlds, because the disposal would result in Dawn being debt-free and it would retain the master distributorship to a highly desirable product range.

In Dawn’s audited consolidated financial statements for the year to March this year, the investment in GDWT had a carrying value of R290.6m and, including impairments of R65.7m, contributed to the total group attributable loss of R637.4m for the period.

Dawn intends to use the transaction proceeds to repay the group’s existing R200m debt with the remainder reinvested in the core master distribution operations of the group.

Hewitt said that Dawn’s turnaround plan had resulted in “huge chunks of costs” being taken out of the company, new management being introduced in every group business and right-sizing of the business.

The cost to the group of downsizing and restructuring in the year to March was R349.1m.

Hewitt said that the group was on course to achieve its stated year-end objective to achieve a break-even this year.

Shares in Dawn dropped 0.87 percent on the JSE yesterday to close at R1.14. THE SA POST Office (Sapo) continues to bleed, with the entity posting a loss of R978 million in the 2016/17 financial year.

This, however, was a 13 percent improvement from a loss of R1.1bn the previous financial year.

In its financials tabled in Parliament yesterday by the Minister of Telecommunications and Postal Services, Siyabonga Cwele, Sapo said it was not out of the woods yet.

Acting Sapo chairperson Comfort Ngidi said it had cash constraints and did not have sufficient working capital.

He said the Department of Telecommunications and Postal Services gave them funding for the current financial year to stay afloat.

The Post Office was arranging working capital of R400m.

“The Department of Telecommunications and Postal Services allocated R650m in the 2017 financial year for the capitalisation of Sapo.

“The government has issued Sapo with a government guarantee of R4.17bn and R3.7bn utilised to acquire external funding,” said Ngidi.

“The cause of the deterioration of the group’s liquidity position is both due to internal and external factors,” said Ngidi.

He said Sapo had been tasked with managing the distribution of set-top boxes and antennae for the broadcasting digital migration project, and was allocated R240m in the 2017 financial year, with a further allocation of R240m in the 2018 financial year.

Sapo said that it would continue to operate as a going concern, based on its strong financial position with its assets exceeding its liabilities by R1bn.