CONSOLIDATED INFRASTRUCTURE GROUP LIMITED
(in business rescue)
(Incorporated in the Republic of South Africa)
(Registration number 2007/004935/06)
JSE share code: CIL ISIN: ZAE000153888
(“CIG” or “the Company”)
DISPOSAL OF CONSOLIDATED POWER MAINTENANCE
1. Introduction
Shareholders are advised that CIG and its wholly owned subsidiary, Consolidated Power Projects Proprietary Limited (“Conco”), (the “Sellers”) have entered into a sale of shares agreement with 3Energy Renewables Proprietary Limited (the “Purchaser”), an unrelated third party, to dispose of:
- 100 ordinary shares in the issued share capital of Consolidated Power Maintenance Investments Proprietary Limited (“CPMI”) held by CIG, comprising the entire issued share capital of CPMI; and
- 1000 ordinary shares in the issued share capital of Consolidated Power Maintenance Proprietary Limited (“CPM”), comprising the entire issued share capital of CPM, being a wholly owned subsidiary of CPMI (collectively “Consolidated Power Maintenance”),
- together with any claims CIG and Conco have against Consolidated Power Maintenance, excluding an amount of equal to the aggregate quantum of the loan accounts required to be repaid by CPM to the Sellers, (“Sale Interest”) as one indivisible transaction in accordance with the terms of the Transaction, as further set out below for a cash purchase price of R5 900 000 (the “Transaction”).
Consolidated Power Maintenance specialises in the operations and maintenance of renewable energy projects and performs traditional maintenance for municipalities and utilities, from distribution networks to high-voltage transmission sub-stations.
2. Rationale for the Transaction
CIG and Conco commenced voluntary business rescue proceedings on 9 November 2020 and 3 November 2020, respectively. As part of the long-term solution for CIG, the business rescue practitioners (“BRPs”) have no alternative but to dispose of a number of CIG’s business assets on an urgent basis in order to reduce CIG’s liabilities, meet bank lending obligations, and to meet CIG’s ongoing working capital requirements.
The proceeds from the Transaction, together with other cashflow initiatives being undertaken by the BRPs, will provide CIG with the liquidity required to continue to meet its general and business rescue operating cost obligations (and thus avoid immediate liquidation) while the business rescue plan is being finalised.
3. Salient terms of the Transaction and suspensive conditions relating to the Transaction
The Transaction is subject to the fulfilment or waiver (as the case may be) of the following suspensive conditions by 30 April 2021 (or such later date as agreed to between the parties):
- the payment of the March 2021 payroll by CPM;
- receipt by CPM of written cancellation notices of the operations and maintenance contracts that it has with Ejuva One Solar Energy Proprietary Limited and Ejuva Two Solar Energy Proprietary Limited;
- the repayment by CPM of such aggregate quantum of the loan accounts held by each of CIG and Conco in and against CPM, as has been agreed to in writing between the Sellers and the Purchaser on or before the calendar day immediately following the date on which the suspensive conditions detailed above are fulfilled, which amount is specifically excluded from the Sale Interest; and
- the shareholders of the Purchaser and the board of directors of the Purchaser respectively pass all resolutions required for the lawful implementation of the Transaction.
The aggregate purchase price payable by the Purchaser to the Sellers for the Sale Interest is an amount equal to the sum of R 500 000 (“Base Purchase Price”) plus (i) the first agterskot amount of R2 100 000 (“First Agterskot”), (ii) the further agterskot amount of R1 300 000 (“Further Agterskot”) and (iii) the final agterskot amount of R2 000 000 (“Final Agterskot”). The Base Purchase Price is payable within 3 business days after the date on which the last of the suspensive conditions is fulfilled or waived (“Closing Date”). The First Agterskot and Final Agterskot are payable on the thirtieth calendar day following the date on which the First Agterskot condition and Final Agterskot condition as further detailed below, is fulfilled. The Further Agterskot is payable on the tenth Business Day following the date on which the Further Agterskot Condition, as further detailed below, is fulfilled.
The First Agterskot shall be payable on the fulfilment of the First Agterskot condition being that the bids for operations and maintenance contracts for two solar farms are awarded to CPM.
The Further Agterskot shall be payable on the fulfilment of the Further Agterskot condition being that a client assigns the rights and obligations under an operations and maintenance contract to CPM.
The Final Agterskot shall be payable on fulfilment of the Final Agterskot condition being the receipt by CPM of payments in an aggregate amount of not less than R2 000 000 from an existing CPM customer under an existing CPM contract.
The Transaction agreement provides for undertakings, warranties and indemnities which are normal for a transaction of this nature.
4. Financial information
As at 31 December 2020 the value of net assets that are the subject of the Transaction is negative R59 271 175 and the loss attributable to the net assets that are the subject of the Transaction for the twelve months ended 31 December 2020 was R1 926 256.
The above financial information has been extracted from the management accounts of CPM for the 12-month period ended 31 December 2020 which were prepared in terms of the CPM’s accounting policies and International Financial Reporting Standards. CIG is satisfied with the quality of these management accounts for the purposes of this announcement.
5. Categorisation
The Transaction constitutes a category 2 transaction in terms of the JSE Listings Requirements and accordingly does not require shareholder approval.
26 March 2021
Sponsor
Corporate advisor
BSM Advisory Proprietary Limited