Nampak Limited Streamlines Operations with Sale of Tanzanian Property to Reduce Debt

Nampak
  • Nampak Limited, a leading packaging company, has announced the sale of its property in Tanzania as part of its portfolio optimization strategy.
  • The property, associated with Nampak’s closed manufacturing business in Tanzania, will be sold to Canda (T) Investment Company Limited for a total consideration of US$5,550,000.
  • The proceeds from the sale will primarily be used to reduce Nampak’s interest-bearing debt, strengthening the company’s financial position.

Nampak Limited (JSE: NPK) recently announced the sale of its property in Tanzania as part of its strategic portfolio optimization efforts. The disposal of the property aligns with Nampak’s focus on reducing interest-bearing debt and streamlining its operations.

The sale agreement was made through Nampak’s wholly-owned subsidiary, Nampak Tanzania Limited, with Canda (T) Investment Company Limited as the purchaser. The property in question is associated with Nampak’s manufacturing business in Tanzania, which has been fully wound down and closed.

Situated on Plot No. 46/1 Pugu Road Area, Ilala Municipality, Dar es Salaam, the property spans an area of 20,096.689 square meters. The agreement outlines the conditions and terms under which the property will be transferred to Canda Investment.

The total consideration for the property amounts to US$5,550,000, including VAT. To facilitate the transaction, the payment will be made in four installments. The first installment, totaling US$2,887,500, is expected to be paid by 31 May 2023. Subsequent installments of US$887,500 each will follow, with payment due by 30 June 2023, 31 July 2023, and 31 August 2023, respectively.

The primary purpose of the proceeds from the disposal will be to reduce Nampak’s interest-bearing debt, strengthening the company’s financial position and enhancing its operational flexibility.

It is important to note that the sale agreement solely pertains to the property itself and does not include any other aspects of Nampak Tanzania’s business, such as contracts or supply agreements with customers. All existing contracts and agreements will remain under the purview of Nampak Tanzania.

Canda Investment, the purchaser in this transaction, is not classified as a ‘related party’ according to the JSE Limited Listings Requirements. The ultimate beneficial shareholder of Canda Investment is Jianhong Huang.

However, the sale is subject to certain conditions precedent, including the approval of the Commissioner for Land for the disposition of the land and consent. The transfer of the Certificate of Right of Occupancy hinges on meeting these requirements.

Both Nampak and Canda Investment have provided representations and warranties in the sale agreement, which are standard for transactions of this nature.

The book value of the property is recorded as US$107,383, with no profit attributable to the property from operational activities.

Given the nature of the transaction, it falls under the Category 2 classification as per the JSE Listings Requirements. Consequently, no shareholder approval is required for this disposal.

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