AutoZone acquisition by Metair gets green light

mage source: AutoZone website

AutoZone entered business rescue in July after its board of directors passed a resolution to enter business rescue on 1 July due to the company being in financial distress.

The company nominated Piers Michael Marsden and Jenna Lee Osborne from Matuson & Associates as its business rescue practitioners.

AutoZone CEO Dion De Graaff said in a sworn statement as part of the company's business rescue notice that AutoZone is principally involved in the motor spares industry by aftermarket automotive parts and accessories and that its principal activities are the wholesale and retail of its products.

De Graaff said AutoZone underwent a private equity transaction in 2014 funded by a responsible level of debt. However, the retailer did not meet expectations due to the country's challenging economy.

"Efforts to address the lack of performance were further impeded by the Covid-19 pandemic, civil unrest, and a period of stagflation.

"Throughout this period, AutoZone faced increasingly burdensome debt service obligations. By 2021, it became apparent that operations were contracting below break-even levels," De Graaff said.

AutoZone's lender, Absa, introduced quarterly debt service holidays to negate the challenges. However, it was not enough to return to positive leverage for AutoZone.

The Metair Group manages an international portfolio of companies that manufacture, distribute and retail products for energy storage and automotive components. Its business comprises two key divisions, namely the: automotive components division; and energy storage division. The ESD further manufactures and supplies automotive aftermarket batteries.