Automotive components and aftermarket group Metair has completed its R3.3bn debt refinancing, which represents a significant milestone in strengthening its capital structure.
The company said on Monday that the company and its principal lender, Standard Bank of South Africa, have approved a refinancing of the current debt package.
The refinance extends the term of the entire R3.3bn to five years. This allows for a repayment profile that matches expected earnings growth and cash flows, including elevated capex planned for the 2026 financial year to cater for a key customer model changeover, Metair said.
A primary objective of the refinance was to address the maturity of the R1.6bn subordinated loan, which was payable by the end of June 2027.
“This facility has now been converted into a conventional senior term loan repayable over five years, thereby enhancing the sustainability of the company’s capital structure,” Metair said.
As part of the refinance, the interest rates and covenants have been renegotiated, and the reference rate has transitioned from Jibar (Johannesburg interbank average rate) to Zaronia (the South African overnight index average), in line with prevailing market convention.
“Importantly, the cumulative earnings before interest, tax, depreciation and amortisation (ebitda) performance hurdle has been removed from the revised debt structure,” it said.
Under the previous financing arrangement, the company was required to meet cumulative quarterly ebitda targets, failing which it would have been obliged to pursue remedial actions, including a potential equity raise and/or asset disposals.
“This requirement has been eliminated under the revised structure, providing the company with enhanced operational flexibility and reducing the risk of forced capital actions,” it said.
The working capital facility of R600m, inclusive of R75m ringfenced for Smiths Manufacturing, remains unchanged but will be subject to review during the third quarter of the 2026 financial year.
“The refinance represents a significant milestone in strengthening Metair’s capital structure and positioning Metair to execute on its strategic and operational priorities over the medium term,” it said.
Earlier this year the group reported a 57% increase in revenue to R17.9bn in the year to end-December, driven by the inclusion of Hesto from April 2025 and AutoZone for the full year.
However, a European regulatory fine on Rombat and other one-off items have weighed on earnings.
The fine relates to a €20.2m penalty imposed by the European Commission on Romanian battery manufacturer Rombat, in which Metair owns a majority stake.
Metair lodged an appeal in February against the fine, which relates to historic industry-wide conduct in 2004–2017 regarding automotive battery pricing premiums. The conduct predates Metair’s acquisition of Rombat in 2012, it maintains.
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