AVENG LIMITED - AEG : Category 2 transaction annou4 Oct 2019
(Incorporated in the Republic of South Africa)
(Registration number: 1944/018119/06)
Share code: AEG
Share ISIN: ZAE000194940
("Aveng", "the Company")
CATEGORY 2 TRANSACTION ANNOUNCEMENT: Disposal of Grinaker-LTA Mechanical and Electrical Business
1. Background and Rationale
Following the strategic review concluded in 2018 and as part of the non-core disposal process, Aveng, acting through
its wholly owned subsidiary, Aveng Africa Proprietary Limited ("Aveng Africa" or the "Seller"), has entered into a
binding term sheet, with Laula Consortium Proprietary Limited (the "Purchaser" or “Laula”), for the sale of the
Grinaker-LTA Mechanical and Electrical Business ("M&E Business"), subject to certain conditions precedent
("Proposed Transaction").
The M&E Business was identified as non-core as part of the strategic review. The M&E Business:
• has an extensive record of accomplishment of successful contracts in the structured steel, mechanical,
electrical, instrumentation and piping projects executed in the oil and gas and resources sectors; and
• is a well-established player in the shut-down and maintenance sector, where it regularly undertakes work in
several of the large petroleum refineries.
Laula is a black-owned company whose shareholders include Oteo Investment Holdings Proprietary Limited (“Oteo”),
Manzini Ventures Proprietary Limited and Upsize Trading Proprietary Limited. Laula which is led by Mlu Manci of
Oteo, boasts black senior management experience going back to 1984 and technical experience in major
construction projects in South Africa, from large civil infrastructure projects to complex, commercial buildings.
2. Salient terms of the Proposed Transaction.
The Proposed Transaction will be effected through the sale of 100% of the issued shares ("Sale Shares") in GrinakerLTA Proprietary Limited (“GLTA”), a subsidiary of Aveng Africa which owns and operates the M&E Business, to the
The purchase price payable for the Sale Shares will be R72 million, payable in cash on the closing date of the
Proposed Transaction.
The Purchaser will be entitled to conduct a confirmatory legal and financial due diligence in relation to the Sale
Shares and the M&E Business for a period of 14 days after term sheet signature date.
The Proposed Transaction will be subject to standard warranties as are customary to a transaction of this nature
which will be contained in the transaction agreements to be concluded by no later than 31 October 2019 ("Final
The proceeds from the sale will be used to strengthen the financial position of the Company.
3. Consents and Conditions Precedent
The Final Agreements will be subject to the following conditions precedent:
• Approval being granted by, or notification given to, the various financiers who are a party to the Common
Terms Agreement concluded with Aveng;
• Aveng implementing the restructure of GLTA to include only the M&E Business and any foreign subsidiaries
in relation thereto;
• To the extent necessary, consent obtained from the relevant third parties to cancel or transfer any bonds,
performance guarantees and indemnities from the Seller to the Purchaser;
• The Purchaser having entered into the necessary funding and/or bonding agreements for all new or
replacement facilities, and such agreements having become unconditional in their terms;
• The cession and assignment of the existing lease agreements to the Purchaser; and
• The obtaining of all statutory and regulatory approvals, including Competition Commission approval.
4. Closing Date
The transaction is expected to close no later than 1 December 2019 after all conditions have been met.
5. Net Asset Value and Profit attributable to the M&E Business as at 30 June 2019
The net asset value attributable to the M&E Business at 30 June 2019 was R59 million and a profit after tax of R8
million. This information has been extracted from the unpublished management accounts.
The management accounts were prepared in terms of the Company’s accounting policies. The Company confirms
that it is satisfied with the quality of such management accounts.
This financial information has not been reviewed or reported on by Aveng’s external auditors.
6. Categorisation
The Proposed Transaction is categorised as a Category 2 transaction in terms of the JSE Listings Requirements and
accordingly no shareholder approval is required.
Jet Park
04 October 2019
JSE Sponsor
UBS South Africa Proprietary Limited
Legal advisors
Baker & McKenzie
Advisors to Laula Consortium Proprietary Limited
Fevertree Consulting Proprietary Limited, and
Cornerstone Capital Partners
Michael Canterbury
Group Executive: Strategy & Investor Relations
Tel: 011 779 2979
Email: michael.canterbury@avenggroup.com