Nampak shares recorded the biggest gain in two weeks on Friday after the company announced its long-awaited sale of Bevcan Nigeria with all the conditions met, including regulatory approval.
Nampak shares closed 6.38% higher at R449.39, their most significant jump since January 14. The hike values the company at R3.5bn — double its market capitalisation after completing an oversubscribed R1bn capital raising in 2023.
The group’s share price has more than doubled over the past year as the group implemented a series of turnaround initiatives, including numerous disposals to focus on the core metals market in SA, which the market has lauded.
Completing the disposal of Bevcan Nigeria and an exit from exposure to that country’s volatile currency is the latest move in its plans.
The effective date of the disposal, first announced in June last year, is January 31, the group said in a statement on Friday.
Nampak will receive $58.2m of the expected final purchase price of $68.2m in cash. The balance, representing historic trade payables with Nampak International, is payable with interest by February 7.
That will be subject to a final working capital reconciliation to be determined and finalised in accordance with the process contained in the share purchase agreement. The closing date of the disposal would be February 3, it said.
“This is a material milestone in deleveraging the group’s financial position, a reduction in the group’s historic risk profile and a positive step change to the leverage ratio. This allows for the refocusing of the group’s efforts on the core metals group and in so doing unlocking further shareholder value,” Nampak said.
Nampak first expanded into the rest of Africa in 2007 when it opened a greenfield plant in Nigeria. In 2011, Angola’s first beverage can facility was commissioned, attracting further investment. As Nampak strengthened its presence in the rest of Africa, it acquired another beverage can facility in Nigeria in 2014.
The packaging group has been cutting back its operations as part of a comprehensive turnaround plan after its African plans turned sour. Last year the group announced its disposal plan through which it hopes to raise R2.6bn to settle debt.
CEO Phil Roux said at the time asset sales were core to restoring the long-term health of the company.
In March, the firm announced plans to dispose of its liquid cartons business in SA for R450m, saying the transaction would also cause it to sell the issued shares of Nampak Zambia and Nampak Malawi to a consortium.
Its move into Nigeria and Angola in 2011-2014 was funded in dollars, resulting in elevated gearing.
Nampak decided to close its Nigeria Metals business in July due to subdued demand for metal can products manufactured there, while a drop in the value of the naira worsened the situation.
In August, Nampak entered into a sale and purchase agreement with Twinings Ovaltine to sell its Nigeria Metals property and various equipment, tools and machinery.
Nampak, which supplies packaging for companies, including Coca-Cola and Tiger Brands, raised R1bn in September via arights offer that was oversubscribed.
Late last year the group also announced the sale of its 51.43% holding in Nampak Zimbabwe to Zimbabwe Stock Exchange-listed TSL for $25m.
In October Business Day reported that Nampak had successfully concluded its refinancing with Standard Bank in September, having met the deadline by its lenders to return R720m in net debt from disposals by the end of the same month.
The company said this had resulted in a significantly simplified funding structure, with only a minor foreign debt component.
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