Nampak Zimbabwe Partners with TSL Amid Economic Challenges

Nampak is selling a 51.43% stake in Nampak Zimbabwe to TSL for $25 million amid difficult economic conditions. The sale is subject to suspensive conditions, and TSL will need to present a mandatory offer to remaining shareholders. Nampak aims to address economic challenges through asset disposal and cost containment strategies.

Nampak has finalized an agreement to sell its Zimbabwean subsidiary to TSL, a logistics and processing company based in Harare. This transaction is contingent upon certain suspensive conditions. Nampak Southern Africa is disposing of 51.43% of its stake in Nampak Zimbabwe, with TSL acquiring it for $25 million. The complete details of the disposal are anticipated to be announced within a few weeks.

As part of regulatory compliance, TSL must extend a mandatory offer to the remaining shareholders of Nampak Zimbabwe. This offer can be executed either through cash or share swaps, demonstrating TSL’s readiness to fulfill its obligations. The procurement process will occur independently of Nampak’s involvement after the completion of the sale.

The decision to sell stems from Nampak’s broader asset disposal initiative, driven by adverse economic conditions in Zimbabwe, including policy changes and currency instability. Nampak Zimbabwe is currently prioritizing cost-containment strategies to maintain profitability amidst these challenges.

The managing director of Nampak Zimbabwe, John van Gend, acknowledged the complexities of operating within Zimbabwe’s economic climate, which have intensified recently due to new currency policies. These regulations mandate companies to report in the local currency, complicating financial reporting for Nampak, which has adjusted to US dollar reporting.

Moreover, during the last quarter, Nampak Zimbabwe encountered significant challenges, including reduced demand for packaging materials resultant from increased competition and supply chain disruptions linked to civil unrest in Mozambique affecting its logistics. Despite receiving raw materials, the delays hindered delivery, especially during peak seasons.

The ongoing economic turmoil in Zimbabwe has the potential to further diminish market demand, as the retail and wholesale sectors experience extensive branch closures. In the last quarter, the company reported a 23% decline in revenues while trading profits plummeted by 56%, attributed to deteriorating demand across all units and fluctuating exchange rates following severe depreciation of the local currency.

In conclusion, Nampak’s sale of a majority stake in its Zimbabwean unit to TSL signifies a strategic response to the difficult economic landscape in Zimbabwe. As Nampak navigates these challenges through cost-control measures and compliance with regulatory requirements, it remains to be seen how TSL will manage the subsequent mandatory offer and the overall impact on the Zimbabwean market.

Original Source: www.newzimbabwe.com