Battery and automotive components manufacturer Metair has agreed to pay R290m to acquire AutoZone, the largest privately held retailer of automotive parts in SA, which is undergoing corporate rescue.
JSE-listed Metair told investors on Friday that it had entered into a sale of shares and facility agreement with TP Hentiq and the appointed business rescue practitioners of AutoZone to buy the entire issued share capital of the spare vehicle parts supplier.
The firm said the transaction would enable it to grow its automotive aftermarket businesses and would result in Metair or one of its subsidiaries advancing a facility to AutoZone to settle creditor claims and fund certain working capital requirements.
“The acquisition is in line with Metair’s strategy of diversification in the mobility sector and provides Metair with an established distribution channel to grow Metair's current automotive aftermarket businesses in SA,” the company said Friday in a statement.
“Metair is of the view that after the restructuring of AutoZone in terms of the business rescue plan and investment in working capital, the business can return to profitability and be value accretive for Metair.”
Business Day reported in September that Metair was pushing to diversify its remaining operations after the looming sale of its Turkish company, Mutlu Akü, targeting growth and expansion into the rest of Sub-Saharan Africa.
With more than 169 retail locations and seven QSV stores, AutoZone is a privately held company that entered into business rescue proceedings in July after its ballooning debt affected its profitability, resulting in its credit provider, Absa, electing not to provide any further debt extensions on its R302m debt pile.
As of July 1, AutoZone’s net assets, excluding liabilities covered by the Business Rescue Plan were estimated to be worth R485m, including R421m in net working capital.
AutoZone’s trading performance has mainly been influenced by the large debt on the balance sheet, owing to the company’s 2014 leveraged acquisition. The financial arrangement is said to have hindered AutoZone’s capacity to make long-term investments in working capital, which in turn affected its previous profitability.
Business management consultant firm Matuson and Associates was appointed as Autozone’s rescue practitioner. Metair said the practitioner was authorised and empowered to conclude the transaction for, and on behalf of, AutoZone.
The business rescue practitioner is anticipated to file a notice of substantial completion of the business rescue plan with the Companies and Intellectual Property Commission (CIPC), and AutoZone will exit business rescue proceedings.
All of AutoZone's historical debt is expected to be settled after the implementation of the rescue plan. However, Metair may cancel the agreement, which is subject to regulatory approval, if AutoZone’s actual net working capital at the closing date is less than R344m.
TP Hentiq is owned by the James and Paula Family Trust; GPAM Proprietary, Ethos Fund VI, Ethos Mid- Market and Emerald Panther Investments 42.
In a creditor meeting, Absa controls and holds more than 75% of the votes due to its status as the business rescue plan’s favoured creditor.
Metair has reported progress on its stabilisation and turnaround strategy, which will be concluded in the second half of its 2024 financial year. The debt restructuring programme of the firm with a R2.3bn market cap on the JSE is expected to start in the fourth quarter.
Metair shares were down 0.08% to R12.22 on Friday morning, having risen over 6% in the last 90 days of trade.
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