Nampak Southern Africa Holdings Limited was compelled to sell its controlling stake of 51.43% in Nampak Zimbabwe as part of a strategy to reduce its substantial debt, reported <a href="https://businesstimes.co.zw/mounting-debt-forced-sa-firm-to-sell-off-nampak-zimbabwe/">Business Times</a>.
Analysts indicated that divesting assets in markets like Zimbabwe was the only viable solution to address the company’s financial issues.
From 2011 to 2014, Nampak Southern Africa Holdings struggled to manage significant debt incurred from its expansion efforts in other African countries, particularly Angola and Nigeria.
The company faced operational challenges in Nigeria, leading to heavy indebtedness.
By March 2019, Nampak’s debt had reached R7.6 billion (approximately US$432.76 million), prompting a mix of asset sales and rights offerings to mitigate the financial burden.
In 2023, Nampak SA entered into refinancing agreements, which require settling R2.7 billion (around US$153.75 million) of outstanding debt by March 31, 2026, through further asset disposals.
This situation led to the decision to sell a controlling stake in Nampak Zimbabwe for approximately R438 million (US$25 million).
In its latest market intelligence report, research firm Morgan &amp; Co said:
<blockquote>
The transaction is borne out of Nampak South Africa’s challenges with debt for the better part of the last decade.
It is on the back of this that Nampak South Africa resolved to dispose of several assets both locally and regionally in a bid to ease the weight of the debt, and the sale of Nampak Zimbabwe controlling stake to TSL is the latest disposal to make headlines.
</blockquote>
Under the deal, TSL will purchase 51.43% of Nampak Zimbabwe for a total consideration of US$25 million.
TSL will have until June 2025 to settle US$23 million of the total consideration, with the remaining balance to be paid off over the subsequent two years.
The relationship between TSL and Nampak Zimbabwe is not new; TSL previously held a 16.53% stake in Nampak Zimbabwe until its disposal in 2018.
According to the report, TSL primarily provides ancillary services to the agriculture sector and has been operational since 1957.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Pindula News

A company called Nampak had too much debt, so they had to sell their part of a company in Zimbabwe. This was to help with the debt they had from expanding in other countries. They had to sell the stake for about $25 million. Another company called TSL will buy it and pay $23 million soon and the rest over two years. TSL was already involved with Nampak Zimbabwe before. The sale was needed to help Nampak with their financial problems.

Mounting Debt Forced SA Firm To Sell 51.43% Of Nampak Zimbabwe

<a href="https://www.pindula.co.zw/Nampak_Zimbabwe_Ltd">Nampak Zimbabwe Limited</a>, a packaging company listed on the <a href="https://www.pindula.co.zw/Zimbabwe_Stock_Exchange">Zimbabwe Stock Exchange (ZSE)</a> recorded a 43% jump in revenue for the year to September 30, 2022, to ZW$$52.52 billion from ZW$$36.69 billion the previous year. 
Exports for its Mega Pak division showed a resurgence in the local markets over the period under review compared to the prior year.
A profit before tax of ZW$$8.75 billion was achieved compared to ZW$$5.76 billion in the same period last year.
According to Nampak, the profit before tax takes into account other material income of ZW$$2.48 billion and a net monetary loss of ZWL$$4.11 billion. Other income, in the main, comprises exchange gains on foreign-denominated debtors and cash balances.
Profit for the year remained flat at ZW$$2.6 billion. Earnings per share at 346.12 cents were below the prior year’s 347.03 cents.
During the year under review, overall demand for packaging improved significantly compared to the previous year with the company benefiting from improved economic activity led by a rebound in agriculture and mineral commodity prices.
In an update for the year under review, managing director John van Gend said that the group achieved sales for the year in inflation-adjusted terms of $52.52 billion.
He said the company worked hard on cost reduction initiatives and improving the working capital cycles.
Van Gend said the group currently has some significant capital projects currently being reviewed by management.
Nampak did not declare a dividend in order to preserve capital.
<h2><a href="https://news.pindula.co.zw/">More Pindula News</a></h2>

NamPak Latest News

Latest Jobs