Spar says the sale of its Swiss operations has reduced group debt by R2.7bn, removed all cross-border guarantees and put the retailer in a stronger position to resume dividends earlier than planned.
Spar’s debt stood at R9.7bn as at March 28.
The group told investors on Tuesday that the Sf46.5m (about R1bn) deal with Tannenwald Holding AG, a Swiss family-owned investment company, effectively closes out all exposure to the underperforming unit. The buyer has taken on Spar Switzerland’s debt, while Spar injected additional funds to settle historical obligations and a Swiss competition fine.
Although the transaction required a cash outflow from SA, Spar said the balance sheet impact is positive. The Swiss subsidiary had been carrying unsustainable gearing levels of about 14 times, while SA guarantees tied to the unit inflated group leverage. The release of those guarantees and the assumption of debt by the buyer reduce Spar’s gearing and are expected to lower funding costs.
The deal includes a potential earn-out of up to Sf30m over two years if the Swiss business achieves agreed profit targets. Spar will not be involved in operations but will receive quarterly management accounts to monitor performance.
The company said the disposal gives the group a clearer path to reinstating dividends, which had previously been guided for the 2026 financial year. The target remains to reach 1.5 times SA gearing, with more detail expected at year-end results.
Spar suspended dividends in 2022 to focus on its financial stability, balance sheet resilience, and growth opportunities. Shareholders last received 225c per share in December of that year.
The sale follows a strategic review of Spar’s European assets, which earlier this year led to a R3bn impairment of the Swiss unit. Spar Switzerland operated more than 350 stores, 11 cash-and-carry outlets and a distribution centre, but never delivered the returns anticipated when Spar entered the market in 2016.
At 3.50pm Spar’s share price was up 6.8% to R112, in its biggest one-day gain in 15 months. It is, however, down 23% so far this year.
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