The US department of commerce’s Bureau of Industry and Security (BIS) has agreed to extend the deadline for diversified industrial group Barloworld to provide clarity on alleged export breaches in its Russian operations.
The heavy industrial and consumer equipment group alerted shareholders in September that it had filed an initial notification of voluntary self-disclosure with US authorities, in which it flagged possible export control violations at its Vostochnaya Technica (VT) Russian subsidiary.
VT supplies the full range of CAT and other original equipment manufacturer (OEM) products, including surface earthmoving equipment, underground mining units, parts and after-sales support services.
Speaking to investors after the initial announcement, CEO Dominic Sewela said amid the many regulations pertaining to Russia since its invasion of Ukraine in February 2022, Barloworld’s compliance team discovered that the shifting export control regimes were affecting several items they should not have imported, prompting an internal investigation.
Russia is an important market for the JSE-listed group, which chose to keep its Russian operations going despite sanctions, saying it was equipped with sufficient funding facilities to run it.
“Given the complexities involved in the investigation, the BIS has granted an extension of the deadline for the company to complete its investigation and submit a final narrative account of voluntary self-disclosure by June 2 2025,” said the company on Monday.
This comes as Barloworld is embroiled in a boardroom battle over a multibillion-rand bid to take the company private by a consortium led by Sewela.
Together with Saudi Arabia’s Zahid Group, which holds about 18.9% of Barloworld, Sewela had offered to buy out the entire company at an 87% premium to its share price at the time, with the offer valuing Barloworld at R23bn.
The offer equates to just more than 4.3 times the company’s historical earnings before interest, tax, depreciation and amortisation.
However, the Public Investment Corporation (PIC) recently joined UK-based Silchester International Investors in voting down the consortium’s offer, raising concern about the industrial stalwart’s governance.
The PIC is Barloworld’s largest stakeholder, with a 21.97% stake, while Silchester owns about 18% of the group.
Silchester has spoken out against the takeover offer, citing the company’s board’s failure to manage a conflict of interest relating to Sewela’s participation in the consortium.
Silchester insists that the company’s board has failed to manage this conflict.
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