IN a show of confidence in prospects for Zimbabwe's economy, Nampak South Africa is looking to expand its local footprint through acquisition of the entire equity of packaging solutions providers Carnaud Metal Box and MegaPak.
The transaction will significantly dilute other current major shareholders in Hunyani namely TSL, from 39,1 percent to 16,53 percent and Old Mutual from 9,23 percent to 3,9 percent.
In a circular to shareholders Hunyani Holdings said the packaging industry in Zimbabwe faced several impediments including access to working capital, lack of technology, high costs, skills shortage and threats from imports.
With Hunyani, CMB and MegaPak among the major players in the packaging industry, Nampak is seeking to extend its investment through consolidation the trio's operations.
The proposed transaction would result in the merger of CMB, Hunyani Holdings and MegaPak with shareholders of the three firms assuming equity in enlarged entity, Hunyani Holdings.
However, if approved by shareholders the transaction will result in Hunyani Holdings being renamed Nampak Zimbabwe and bequeathing its listing on the Zimbabwe Stock Exchanged to the new enlarged packaging solutions provider.
A total of 389 446 655 Hunyani Holdings ordinary shares will be issue to shareholders of CMB and MegaPak, resulting in Nampak assuming a 51,4 percent stake in Hunyani.
Nampak currently holds 49 percent stake in MegaPak Zimbabwe-with the balance of 51 percent held by Delta Corporation-100 percent of CMB and 39 percent of Hunyani. Nampak said it was committed to its Zimbabwe operations.
After completion of the transaction, Nampak will hold 51,4 percent of Hunyani, Delta 22,59 percent, TSL Limited 16,53 percent, Old Mutual 3,9 percent and NSSA 2,66 percent.
Expected benefits from the consolidation of the operations include diversification, wider distribution capacity, expanded plant capacity, increased production, better skills retention, enhanced product quality, larger and stronger balance sheet.
The transaction would raise Hunyani's revenue for the period to April 30 2014 to $50,5 million from $18,9 million and overturn its loss of $219 000 to a profit for the period of $2,2 million. Further to the shareholding consolidation and issue of shares to shareholders of CMB and MegaPak, Hunyani will undertake an issue for cash to raise $2,6 million in fresh capital.
This will be done through the issuer of 46 490 418 new ordinary shares in Hunyani to Nampak Holdings Limited shareholders while the former's share capital will be increased to give effect to the consolidation of the trio's operations.