Super Group pulls in R27m with Mica sale

This deal is the latest in the growing list of noncore assets Super Group is in the process of disposing of as it tries to reduce its debt load and ease liquidity woes.

CEO Peter Mountford told Business Day on Friday that Super Group had sold its Mica Norwood, Mica Umhlanga and Mica South Coast stores to consumer goods distributor Massmart for R27m.

Mountford, who took over the helm in July, said 138 Mica stores were independently owned by franchise members. He said the group would within the next week sell the Mica trademark to a group of interested franchisees.

There was no debt linked to these stores, he said. In terms of the deal, Massmart was not assuming any liabilities associated with these stores. The Mica deal is subject to approval by the Competition Commission and the JSE.

An analyst at Investec Asset Management, John Thompson, said the stores fitted nicely into Massmart. He said the Mica sale was likely a precursor of further sales and another step aimed at helping Super Group pay down its debt. “Super Group is trying to get in as much cash as quickly as possible to gain a firmer footing.”

The Mica disposal forms part of the larger plan to offload noncore assets. Massmart owns stores such as Dion, Game, Makro and Builders Warehouse.

Mountford said other deals the group was negotiating were “close to conclusion”, with most “virtually completed”.

He said the sale of AutoZone, part of the group's retail division, required shareholder approval.

The transport and logistics group said recently it had reached an agreement in principle with a consortium of investors led by RMB Corvest, a member of the FirstRand Group, to dispose of AutoZone.

Super Group has also said it has sold its insurance business, Emerald Insurance Company, to short term insurer Santam, but this deal requires clearance from the Competition Commission and the registrar of short-term insurance.

In a statement issued on Friday, Super Group said the disposal of the AutoZone and Emerald businesses was still “in progress”.

More asset sales are expected. These disposals and closures are expected to contribute to the loss of between R1,12bn and R1,37bn for the financial year to June when Super Group reports its latest results. This expected loss seemed to have prompted Fitch Ratings to downgrade Super Group's long term rating to a negative last month. The ratings agency said this reflected its concern over reduced group profitability and losses incurred from the discontinuation of businesses.

Mountford said negotiations concerning the proposed restructure and rights offer were proceeding according to plan.

Creditors — mainly banks and bondholders — and shareholders have proposed that the group pay off debt by raising R1bn through the issue of new shares to existing shareholders at about 45c a share.

Mountford also said the potential of an alternative recapitalisation plan was “being considered”.

A foreign white knight, in the form of an unnamed logistics company, has offered to recapitalise Super Group as long as this investor retains majority shareholder status. In July, this company made a R1,3bn offer to Super Group's board as an alternative proposal to recapitalise the group.

Source: Business Day

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