As Jasco nears the end of its three-year restructuring plan, it is selling its automotive division for as much as R12.6 million.
Jasco, which is in the final year of its turnaround strategy, is also in talks to sell its stake in M-TEC to Taihan Electric Wire, from Korea, the other shareholder. The company has been focusing on exiting low-value manufacturing businesses and is also closely monitoring previously identified and potential non-performing businesses.
In a statement to shareholders, the listed group says it is selling its automotive unit to Lumen Special Cables. Lumen represents the South African operations and is a newly-formed subsidiary of Lumen International Holdings, an Australia-based global supplier of wiring looms, electronic systems and plastic components to vehicle manufacturers and to the automotive aftermarket around the world, says Jasco.
Jasco's automotive unit, a small part of Jasco Electrical Manufacturers, makes products such as harnesses for tow bars, as well as air-conditioning modules. The company explains its sale of the non-core business will aid Lumen in expanding its "current international network to service the South African market and penetrate the African market".
The final price of the unit will be worked out on the effective date and will be based on the net asset value of the entity at the end of August. Currently, Jasco has pegged the net asset value at R6.5 million and says proceeds from the sale will be used to leverage its balance sheet and trim its interest "burden".
The deal is subject to conditions.
Meanwhile, in a separate announcement, Jasco announced its rights offer was successful and it has raised R57.6 million and introduced a "strategic shareholder at the same time". The proceeds will be used to trim its overdraft amount, fund organic growth initiatives, and make its balance sheet more flexible, as it will have a diversity of funding sources and be able to borrow more capital.
In September, when it published its year-end results, the group said it was keen to acquire small, bolt-on, entities to boost top line growth.
In the year to June, the company grew turnover 16.3%, to R1.15 billion, but wants to speed up top line growth to past the R1.5 billion-mark. No single customer accounts for more than 8% of its total revenue.
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