Aveng - disposal of Rand Roads business

Friday 12th July, 2019
Following the strategic review concluded in 2018 and as part of the non-core disposal process, Aveng has entered into a fully funded binding sale of business agreement with Ultra Asphalt (Pty) Ltd. (\"Ultra\") for the sale of the Aveng Grinaker-LTA Rand Roads business unit (\"Rand Roads\") as a going concern (\"Proposed Transaction\"), subject to certain conditions precedent. Rand Roads was identified as non-core as part of the strategic review. Rand Roads is a specialist division within Aveng Grinaker-LTA, whose service offering covers the full supply chain for road rehabilitation and infrastructure, from bitumen binders modification to asphalt production.

Ultra is a newly formed investment special purpose vehicle whose shareholders have a 100% interest in a leading plant-hire operator in South Africa specialising in mining, heavy plant and equipment, quarries, road development, road construction and rehabilitation and water supply. 2. Particulars of the proposed transaction Aveng will sell the operations of Rand Roads (\"Target Business\") to Ultra on a cash free debt free basis. The proposed transaction shall consist of the business of Rand Roads, including all assets and liabilities of the business, and Aveng's 15% interest in Specialised Road Technologies (Pty) Ltd. (\"SRT\").

The proposed transaction consideration is R30 million plus the value of inventory as at the effective date (currently estimated at R7.5 million) with a further working capital adjustment calculated on the net movement in Trade and Other Receivables and Trade and Other Payables, 92 days after the effective date (\"the True Up Date\"). The proposed transaction consideration will be settled by a R25 million upfront payment in cash on effective date with the balance to be settled on the True Up Date.

The proceeds from the sale will be used to strengthen the financial position of Aveng.

Consents and conditions precedent
The proposed transaction is subject to the following consents and 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;
*If required, approval of the competition authorities;
*To the extent necessary and applicable, all shareholders in SRT having waived any rights of pre-emption or similar rights;
*The assignment of the existing lease agreements to the Purchaser; and
*Finalisation of the transitional services agreement providing for the orderly carve out of the Target Business from the Group.

The transaction agreements include warranties normal for a transaction of this nature.

Effective date
The transaction is expected to close no later than 31 October 2019

Net asset value and loss attributable to Rand Roads as at 31 December 2018
Rand Roads was reported as held for sale in the interim financial statements for the period ended 31 December 2018. As part of this classification, the basis of valuation is fair value less cost to sell. The net asset value of the business unit amounted to R57 million at 31 December 2018.

Rand Roads reported a loss after taxation of R10 million for the interim period ended 31 December 2018.
The historical interim financial information for Rand Roads was prepared in accordance with

International Financial Reporting Standards.
This financial information has not been reviewed or reported on by the Group's external auditors

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.

Announcement on the sale of the Aveng Grinaker-LTA Ground Engineering business
Aveng has also entered into a binding sale of business agreement with a newly formed investment special purpose vehicle (\"NewCo\") for the sale of the Aveng Grinaker-LTA Ground Engineering business unit (\"GEL\") as a going concern. The shareholders of the NewCo include Wolf Capital Partners (Pty) Ltd. and the current management of GEL. The purchase consideration of R7.5 million will be settled in cash and is fully funded. The transaction is expected to close no later than 31 October 2019. GEL is a geotechnical contractor based in Johannesburg and was identified as non-core as part of the strategic review.

The disposal is not a categorised transaction in terms of the JSE Listings Requirements and this announcement is made voluntarily.
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