The stake sale is to address the issue of underperforming units
July 17, 2015
Jasco has finally sold its stake in cable company M-TEC, which has been underperforming, for R60 million. Jasco’s 51.1% share of the value of the net assets of M-TEC, as of the end of December, was R183 million, and its share of the profits was R1.2 million. The carrying value of the investment was R119 million.
The listed company noted in an announcement to shareholders on July 17 that it had sold its 51.1% stake in the unit to a CIH subsidiary. CIH is a major shareholder in Jasco as it holds 17.6% of the company.
Jasco has been trying to sell the unit since 2013, when it was placed under review because of poor performance. The company initially entered into talks with Taihan Electric Wire, which owns the remaining 48.9% interest in M-TEC. These discussions failed to yield an agreement after Taihan went through management changes and, earlier this month, Jasco said it was now in talks with CIH.
Jasco notes its sale of M-TEC is in line with its focus on addressing underperforming business units and selling out of non-core and low value-adding businesses. In addition, the company will benefit as it can use the cash to strengthen its balance sheet.
M-TEC makes and supplies non-ferrous products in South Africa including power cables, aluminium overhead conductors, bare copper wire, strip products as well as optical fibre cable.
The payment will be settled through an initial R20 million to be paid upfront and the balance will be settled through monthly installments.
