Aveng asset disposal process advances

Only Trident Steel and Aveng Automation & Control Solutions are left to sell.

Following the strategic review concluded in 2018 and as part of the non-core disposal process, Aveng has now announced that, through its wholly owned subsidiary, Aveng Africa (Pty) Ltd, it has entered into a binding term sheet, with Laula Consortium (Pty) Ltd., for the sale of the Grinaker-LTA Mechanical and Electrical Business (M&E Business), subject to certain conditions precedent. Laula is a black-owned company.

The M&E Business was identified as non-core as part of the strategic review. The M&E Business has an extensive record in the structured steel, mechanical, electrical, instrumentation and piping projects executed in the oil and gas and resources sectors and is a well-established player in the shut-down and maintenance sector, where it regularly undertakes work in several of the large petroleum refineries.

A key component of the strategic plan is the disposal of businesses that do not support the Group’s long-term strategy. While these are inherently good businesses, it is highly likely that they would be more successful in the hands of different owners.

The decision to sell these businesses as going concerns has ensured that Aveng will remain fully engaged to drive improved performance at these businesses until new owners are found. This approach will ensure a sustainable future for employees, customers and suppliers of these businesses and it will also allow Aveng to realise acceptable value for its shareholders in the disposal process.

The M&E Business sale added R72 million to the R520 million that Aveng had already netted from the disposal of six non-core businesses, as well as other assets, and that the process of disposing its remaining non-core businesses would be completed during 2020. The two non-core businesses not yet sold include Trident Steel and Aveng Automation & Control Solutions (ACS).

Aveng management have been simplifying and optimising the portfolio of core businesses due to the challenging market environment in many of the sectors the group operates in and reduced infrastructure investment in the country.

The disposal of non-core assets was aimed at improving revenue growth and the profitability of the group.

Since August 2018, Aveng has disposed of non-core property assets and businesses which include Aveng Water, Aveng Rail, Aveng DFC, Aveng Infraset and most recently the announcement of the sales of Aveng Rand Roads and the Ground Engineering businesses.

The companies already sold, or are in the process of being sold, include: Aveng Rail business to Mathupha Capital for R133 million; Dynamic Fluid Control to Copaflo Fluid Control, for R114 million; Rand Roads to Ultra Asphalt for R37.5 million; Ground Engineering to management and another shareholder for R7.5 million; Aveng Infraset to the Colossal Africa Consortium, for R180 million; Duraset Alrode to Videx Wire Products for R50 million and Grinaker-LTA building and civil engineering to the Laula Consortium for R100 million.

Aveng also sold its Steeledale business for approximately R252 million.