Friday 19th September, 2014
As previously announced, in order to strengthen the financial position of the Group, the Board decided to diversify the Group's funding sources, extend the debt maturity profile and reduce overall borrowing levels and the cost thereof to enable Aveng to concurrently pursue contract claims to a positive conclusion whilst taking advantage of growth opportunities. Consequently, the Group:
*Successfully placed a R2 billion senior unsecured convertible bond with a coupon of 7,25% maturing on 24 July 2019. Authority was granted at the General Meeting on 19 September, to equity settle the bond conversion;
*Embarked on a programme to dispose of non-core assets with the objective of raising at least R2,5 billion. The assets to be disposed of comprise properties and a business unit which up until now could not be disclosed as negotiations had not sufficiently advanced.
Electrix is a standalone business which allowed for an expedient sale process with minimal disruption to both its own and McConnell Dowell's operations.
Aveng wishes to advise shareholders that agreement has been reached today, 19 September 2014, to divest its wholly owned (via McConnell Dowell) Electrix business to VINCI Energies through a share sales transaction for approximately R1,4 billion to be settled in cash.
McConnell Dowell has had a strong relationship with Electrix over many years and will continue that close working relationship in future. VINCI Energies is committed to grow the business in the region and deliver superior service to its customers. Aligned to the strategic objective to strengthen the financial position of the Group, the sale of Electrix positions Aveng for the next phase of growth in core markets. McConnell Dowell will continue to focus on the delivery of complex infrastructure projects in its traditional markets and continued growth in Asia leveraging off its strong footprint and reputable history in that region.
The Transaction is expected to be finalised by 31 October 2014.
Subject of the transaction and a description of its business
The Transaction encompasses the acquisition of 100% of the shares in Electrix Pty Limited (Australia) and Electrix Limited (New Zealand) currently held by McConnell Dowell Holdings Pty Limited (Australia), by a wholly owned subsidiary of VINCI Energies.
Electrix is a utility, resources and infrastructure contractor providing end-to-end services to the transmission, distribution, generation, commercial, industrial, gas, water, transport and telecommunications sectors in the New Zealand and Australian markets.
Electrix's revenue in FY14 attributable to Aveng was R3,4 billion. As at 30 June 2014, it had net assets of approximately R360 million.
VINCI Energies is a French based infrastructure and electrical services company that serves public authorities and major business customers globally, helping them to deploy, equip, operate and optimise their energy, transport and communication infrastructure, industrial facilities and buildings.
As stated above, the Transaction is expected to complete by 31 October 2014.
There are no conditions precedent to the Transaction.
Application of the proceeds
The proceeds will be used to strengthen the financial position of the Group, to reduce overall debt, and to take advantage of growth opportunities.
Categorisation of the transaction
The Transaction is a Category 2 transaction in terms of section 9 of the JSE Listing Requirements.
The pro forma financial effects will be released in due course. Shareholders are therefore advised to exercise caution when dealing in their Aveng securities.