Alert Steel said the purchase price would be paid out of its working capital in monthly instalments. About R8m of the R58.1m would be paid on the completion date of the deal, defined as one day after all suspensive conditions have been fulfilled.
In addition, installments of R5m would be paid on the 15th and last day of each month for the next five months.
Alert Steel has gone through various managerial changes recently. Last week, the company appointed Mahomed Gani as chief financial officer, replacing Johan du Toit, who resigned as chief executive in February and then rejoined the company as chief financial officer two weeks later.
Peter Dodson, the former chief executive of Metcash, was appointed Alert Steel's chief executive in February after Nedbank unexpectedly handed over its loan facilities to Cannistraro Investments. Nedbank sub-underwrote a rights offer in August last year.
At the time, Alert Steel was trying to restructure and refocus itself. The rights offer was intended to secure the company's working capital.
Omphile Investments failed to act as the primary underwriter and that was why Nedbank gained shares in Alert Steel. Omphile was supposed to become Alert Steel's broad-based black economic empowerment partner.
SA's steel market is saturated, with producers having spare capacity and imports flooding in.
Earlier this year, Cannistraro Investments bought a 47.5% stake in Alert Steel, which has been struggling for some time. It bought Nedbank- and Capital Africa Steel-owned shares in the company for which it paid R13.5m, comprising R6m for 24.7m shares and R7.5m to procure the release of Capital Africa Steel from a bank guarantee.
Alert Steel's net loss widened by a whopping 54.6%, from R18m to R28m, in the six months to December last year.
Source: Business Day via I-Net Bridge
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