Major South African company in business rescue gets a lifeline
One of the big South African businesses currently in the business rescue process, AutoZone, will get a fresh lease on life through an acquisition by JSE-listed investment group Metair.
Metair announced on Friday (4 October) that it would acquire AutoZone for R290 million.
AutoZone is a privately owned leading distributor of auto parts, spares and car accessories in South Africa, with approximately 169 retail stores and 7 QSV stores.
AutoZone entered into business rescue proceedings on 1 July 2024 and is currently operating in terms of its Business Rescue Plan.
As of 1 July 2024, the value of AutoZone’s net assets, excluding liabilities that are subject
to the Business Rescue Plan was approximately R485 million, including net working capital
of R421 million.
For the financial year preceding business rescue proceedings up until 30 June 2024, AutoZone generated positive earnings before interest, taxation, depreciation and amortisation of approximately R62 million and a net loss of approximately R61 million.
The values attributable to the net assets, EBITDA and net loss attributable to AutoZone have been extracted from unpublished AutoZone’s unaudited pro forma management accounts for the year ended 30 June 2024, Metair said.
“It should be noted that a key driver of the historical trading performance of AutoZone has been the impact of the significant debt on the balance sheet predominantly related to the 2014 leveraged buyout of the business.
“This funding structure impacted AutoZone’s ability to invest in working capital sustainably, ultimately impacting historical profitability. All of AutoZone’s historical debt will be settled following implementation of the Business Rescue Plan,” it said.
Metair said it is of the view that following the restructuring of AutoZone in terms of the Business Rescue Plan and investment in working capital, the business can return to profitability and be value accretive for the group.
It added that the acquisition would be in line with its strategy of diversification, particularly in the mobility sector.
The transaction’s value is R290 million, payable in cash on the closing date of the deal – however, if the group’s actual net working capital at the closing date is less than R344 million, Metair has the right to terminate the agreement, it said.
Read: Over 1,000 businesses shut their doors in South Africa in 2024