The potential retrenchments at Avusa management level form part of the turnaround strategy by acquirer Richtrau, a subsidiary of Mvelaphanda Group
. As part of the strategy, the aim is to cut head office expenses and drive efficiencies in order to make the company a strong operation.
The document said the potential retrenchments were expected to affect only skilled employees because they were more likely able to find re-employment.
Two weeks ago, Mvela and private equity firm, Blackstar, announced Richtrau would acquire and delist Avusa. The deal would see Mvela, backed by Blackstar, raise R650m in debt, payable over six years. Mvela has also reportedly injected an additional R480m in equity to fund the proposed offer. "By no means a primary focus"
Following the announcement of the Avusa takeover bid, Mvela CEO, Andrew Bonamour, was asked if the merger would lead to any job losses. He said retrenchments were not being considered.
In reference to the effect of the acquisition on employment, a document with the letterhead of top law firm Webber Wentzel partly notes that: "It is possible that a very small number of skilled employees, employed at management level at Avusa head office might be retrenched as a result of the turnaround strategy. Retrenchments are, however, by no means a primary focus of the turnaround strategy."
The document, however, also points out that the acquisition "will not result in substantial job losses and will have no, or at most only a negligible, effect on employment".
The document goes on to say that details regarding the specific individuals and positions that may be affected will depend on the success of other elements of the turnaround strategy which, if effective, could reduce the need for retrenchments.
When the deal was announced, Bonamour told Business Day
he estimated that close to R20m could be slashed off costs in the short term from savings made as a result of trimming the board from 15 members to nine, and costs saved by delisting Avusa.
Source: Business Day
via I-Net Bridge