Metair advised shareholders on Friday that all requirements associated with the disposal of its embattled Mutlu Akü operations in Turkey had been met, with the deal effective from December 19 and fully unconditional.
This comes as a new financing arrangement was signed by the relevant Mutlu Group firms and a syndicate of Turkish banks in alignment with conditions set for the sale. On December 19 the banks’ internal clearances for the new Mutlu financing were also completed.
Due to the liquidity pressure the Mutlu Group is under and the critical need for capital restructuring, Metair and the purchaser agreed to bring the closing date forward.
The buyer, the US-based holding company Quexco Incorporated, is set to advance a closing payment of $1m to Metair due to the complications of an intra-month closing date and the need for transactions and reconciliations to be completed, it said on Friday.
After the final closing adjustments are decided in compliance with the sale and purchase agreement, the final disposal consideration will be decided within 60 calendar days after the closing date, Metair said. The final disposal consideration would not be more than $2m or less than zero.
“These arrangements have been put in place to ensure that the capital restructuring of the Mutlu Group takes place as soon as possible,” it added.
The 2013 acquisition of Mutlu by Metair gave the JSE-listed company sector and geographic diversification.
However, Mutlu Akü, which falls under the energy storage vertical, has been bedevilled by the difficult macroeconomic and geopolitical context in which it operates, including hyperinflation in Turkey.
Throughout 2023, Mutlu Akü faced several additional challenges, including a shortage of contract workers and the loss of material export volumes, resulting in a drop in profitability, high debt levels and increased working capital.
In April the battery and vehicle component maker deployed the help of specialist debt advisers to help it deal with its R4.8bn debt pile as well as to turn around its Hesto Harnesses business and stabilise Mutlu Akü.
The deal, first announced in September, is set to derisk and minimise Metair’s exposure to the challenging operating conditions and hyperinflationary atmosphere in Turkey, where the lira’s depreciation and high interest and inflation rates affect the company’s results, which are reported in rand.
Metair shares were up 2.96% to R10.80 on Friday.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.