Wrap Text
Disposal Of Zestcor, Centlube And Ingwe
ENX GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2001/029771/06)
Share code: ENX
ISIN: ZAE 000222253
Listed on the General Segment of the Main Board
("enX" or "the Company" or "the Group")
GENERAL SEGMENT
DISPOSAL OF ZESTCOR, CENTLUBE AND INGWE ("DISPOSAL COMPANIES" OR ''LUBRICANTS SEGMENT")
1. INTRODUCTION
Shareholders are advised that enX Trading Investments Proprietary Limited ("enX
Trading") and enX Leasing Investments Proprietary Limited ("enX Leasing") collectively
referred to as the "Sellers", both of which are wholly owned subsidiaries of the
Company, have entered into a sale of shares agreement ("the Agreement") with
Abakhulu Investments Proprietary Limited ("Purchaser"), in terms of which enX Trading
will dispose its 66% interest (including loan claims) in Centlube Proprietary Limited
("Centlube"), its 100% interest (including loan claims) in Ingwe Lubricants Proprietary
Limited ("Ingwe") and its 37% interest in Zestcor Eleven Proprietary Limited (''Zestcor''),
and enX Leasing will dispose of its loan claim in Ingwe (collectively the "Sale Equity"),
for an aggregate base price of R275,667,525 as set out in paragraph 5 below
("Disposal" or "Transaction"), which Disposal constitutes a single, indivisible
transaction. The Purchaser is jointly controlled by family trusts of Nicholas Graeme Dunn
and Kyle Peter Dunn, who are not related parties to enX.
2. RATIONALE FOR THE DISPOSAL
The Disposal is in line with the Company's strategy as set out in the outlook statement
in the summarised group financial results for the year ended 31 August 2024 released
on the Stock Exchange News Service on 4 November 2024, wherein the Company
indicated that it would follow a strategy of increasing shareholder value by growing the
underlying businesses and should a suitable opportunity arise, strategically dispose of
those businesses.
The rationale for the Disposal is as follows:
• The Disposal represents an attractive opportunity for enX Trading to monetise its
investment in the Lubricants Segment at a valuation that reflects the prospects and
cash flows of the Lubricants segment and as a single, indivisible transaction;
• The monetary realisation of the Sale Equity is at a value that exceeds the value
reflected in the current enX share price;
• The Disposal is to parties that already manage the Zestcor business, have a key
supply agreement between Zestcor and Centlube which Centlube is reliant on for
base-oil supply, can realise further operational synergies and can unlock further
value with the existing management team;
• The debt of Centlube and Ingwe will remain with such entities; and
• Surplus cash arising from the Disposal would be returned to enX shareholders.
1
3. THE BUSINESS OF THE DISPOSAL COMPANIES
3.1 Centlube directly controls African Group Lubricants Proprietary Limited ("AGL"). AGL
blends and markets oil lubricants and greases in South Africa and sub-Saharan Africa
and is the sole distributor of ExxonMobil lubricants (excluding marine and aviation) and
Quaker Houghton International's advanced fluid solutions and services (excluding
metal working).
3.2 Ingwe owns the CERA blending plant in Boksburg, which is necessary for the blending
of lubricants within AGL's operational activities.
3.3 Zestcor, an associate of enX, is the only authorised distributor of ExxonMobil base
stocks for South Africa and Sub-Saharan Africa. It specialises in the sales, marketing,
procurement and supply of Group I, II and III base oils.
4. EFFECTIVE DATE OF THE DISPOSAL
4.1. The effective date of the Disposal will be the closing date in the Agreement, being the
last business day of the month, in which the later of the following dates fall or such
other date as agreed in writing between the Purchaser and Sellers ("Closing Date"):
4.1.1. the date that all the suspensive conditions, as set out below, have been fulfilled
or waived (to the extent capable of being waived) ("Fulfilment Date"); and
4.1.2. the date on which the final statement detailing the calculation of the Interim
Period Leakage Amount (if any), the Transaction Price, the Closing Payment
and Escrow Amount ("Final Transaction Price Statement") becomes final and
binding.
5. CONSIDERATION
5.1. The Disposal has been structured as a locked box transaction with effect from 31
August 2024 ("Accounts Date") and the aggregate maximum consideration
("Transaction Price") payable in respect of the Disposal is an amount equal to:
5.1.1. Centlube
5.1.1.1. R162,287,661 ("Centlube Base Price"); less
5.1.1.2. the amount of any leakage from the Accounts Date up to and
including the Closing Date ("Locked Box Period") ("Interim Period
Leakage Amount") attributable to Centlube, AGL and African Group
Lubricants SARLU ("AGL DRC") (collectively "AGL Group"); plus
5.1.1.3. an amount calculated by applying a rate of 8.25% per annum
compounded monthly in arrears ("Escalation Rate"), to a net amount
equal to the Centlube Base Price less any Interim Period Leakage
Amount applicable to the AGL Group for the Locked Box Period; plus
5.1.2. Ingwe
5.1.2.1. R39,379,864 ("Ingwe Base Price"); less
5.1.2.2. any Interim Period Leakage Amount attributable to Ingwe; plus
5.1.2.3. an amount calculated by applying the Escalation Rate to a net
2
amount equal to the Ingwe Base Price less any Interim Period
Leakage Amount applicable to Ingwe for the Locked Box Period; plus
5.1.3. Zestcor
5.1.3.1. R74,000,000 ("Zestcor Base Price"); less
5.1.3.2. any Interim Period Leakage Amount attributable to Zestcor; plus
5.1.3.3. an amount calculated by applying the Escalation Rate to a net
amount equal to the Zestcor Base Price for the Locked Box Period.
5.2. The Transaction Price will be paid to the Sellers in cash on the Closing Date, calculated
after taking into account any Interim Period Leakage Amount in the Final Transaction
Price Statement, less an amount equal to 10% of the Transaction Price ("Escrow
Amount") ("Closing Payment").
5.3. The Escrow Amount will be paid to an escrow account of an agreed escrow agent for
the benefit of the Sellers on the Closing Date and will be held for a period of 24 months
as security for any warranty and indemnity (''W&I'') claims post the Closing Date, or
for such longer period in the event that there are any unresolved claims that arose on
or prior to the last day of the 24 month period. W&I claims will be paid from the Escrow
Amount should a claim arise in accordance with the provisions of the Agreement.
5.4. Notwithstanding the amount held in escrow, the board of directors of enX ("Board")
anticipates that the Transaction Price which is not used for Transaction expenses, will
be applied as a return of capital of around R1.54 per enX ordinary share amounting to
R281 million, the timing of which will be dependent on the Closing Date.
6. SUSPENSIVE CONDITIONS
6.1 The Disposal is subject to the fulfilment or waiver (to the extent capable of being
waived) of the following suspensive conditions ("Suspensive Conditions") by no later
than 30 June 2025 ("Long Stop Date") or such other earlier date as specified below:
6.1.1 By no later than the Signature Date, the Purchaser and the Sellers delivering
to each other a copy of the resolutions of their respective boards of directors
approving the terms and conditions of the Transaction and their entry into
the Agreement, and confirming and ratifying the authority of the persons
signing the Agreement as well as the Sellers delivering to the Purchaser a
copy of the resolution of the Board approving the Transaction;
6.1.2 the Competition Authorities approving the Transaction in writing (to the
extent necessary), either unconditionally or subject to such conditions as the
Parties may agree to;
6.1.3 the conclusion of the following agreements and such agreements becoming
unconditional in accordance with their terms:
6.1.3.1 agreements to be concluded amongst the relevant parties relating
to the disposal by Abakhulu Energy Proprietary Limited of its
existing shareholding interest (and related rights) in Centlube to the
Purchaser and the disposal by the trustees for the time being of the
Ingwe Trust of its existing shareholding interest (and related rights)
in Zestcor to the Purchaser ("Pre-Transaction Steps");
6.1.3.2 written facility and security agreements to enable the Purchaser to
3
finance the payment of the Transaction Price under the Agreement;
and
6.1.3.3 escrow agreement to govern the terms of the escrow arrangement
referred to above.
6.1.4 the implementation of the Pre-Transaction Steps;
6.1.5 to the extent required, the Sellers obtaining unconditional written approval
for the Disposal from each of the counterparties to certain material contracts
(or providing written notice to such parties);
6.1.6 to the extent required, the Purchaser and Sellers obtaining the written waiver
from ExxonMobil in respect of any rights of first refusal which may arise in
favour of ExxonMobil in connection with the Transaction as well as the
written release of the Guarantee provided by enX Group to ExxonMobil on
behalf of AGL (including the fulfilment of any conditions set by ExxonMobil
for such waiver and release);
6.1.7 the Purchaser confirming to the Sellers in writing that it is satisfied with the
disclosures in the supplementary disclosure schedule (if delivered) to be
provided in terms of the Agreement;
6.1.8 no material adverse change occurring during the period between the date of
signature of the Agreement and the date on which the last of the other
Suspensive Conditions has been fulfilled or waived (to the extent capable of
waiver);
6.1.9 the written undertaking from Abakhulu Energy Proprietary Limited that it will
not exercise its call option under the sale and purchase of shares and option
agreement it concluded with enX Trading and Centlube in 2022 (on the basis
that such undertaking shall not constitute any waiver of such call option
should the Transaction not be implemented);
6.1.10 the written release of any security which Investec Bank Limited holds over
any of the Sale Equity (including the fulfilment of any conditions set by
Investec Bank Limited for such release); and
6.1.11 if and to the extent such approval is required under applicable laws, the
approval of the Transaction by any governmental or regulatory authority
(other than the Competition Authorities referred to above).
6.2 The parties to the Agreement may extend the Long-Stop Date for the fulfilment or
waiver of the Suspensive Conditions in the manner as set out in the Agreement.
7. SIGNIFICANT TERMS OF THE AGREEMENT
7.1 The Agreement contains warranties and indemnities suitable for a transaction of this
nature.
7.2 The Sellers have provided the Purchaser with a 3-year undertaking not to compete
in South Africa and the Democratic Republic of Congo, subject to certain exclusions.
In addition, the Sellers and Purchaser have agreed not to solicit management and
executives of the Disposal Companies and their subsidiaries and of enX and their
subsidiaries respectively for a period of 12 months.
4
8. FINANCIAL INFORMATION
8.1. In terms of the latest audited annual financial statements of enX for the financial year
ended 31 August 2024, prepared in terms of IFRS:
8.1.1. the net asset value of the subsidiaries of enX, being Centlube and Ingwe, less
the Abakhulu option liability of R57 million, amounted to R271 million, while the
attributable profit before taxation was R100 million for the year ended 31 August
2024; and
8.1.2. the net carrying value of our associate, Zestcor, amounted to R139 million,
while enX share of profits from our associate was R32 million for the year ended
31 August 2024.
9. CLASSIFICATION OF THE DISPOSAL
9.1. The Disposal constitutes a category 2 transaction in terms of the JSE Limited Listings
Requirements.
Johannesburg
13 December 2024
Transaction Sponsor and Advisor to enX
Valeo Capital (Pty) Ltd
Sponsor to enX:
The Standard Bank of
South Africa Limited
Transaction advisor to
the Purchaser:
BSM Advisory (Pty) Ltd
Legal advisor to the
Purchaser:
Webber Wentzel
Legal advisor to the
Sellers:
Munro Smith Parker Law
and Thomson Wilks
5
Date: 13-12-2024 08:00:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
