SOUTH AFRICA – Africa and European-focused logistics provider Imperial Logistics, has moved further to realign its operations after announcing that it would sell its South American shipping business of more than 90 vessels to Hidrovias do Brasil for about US$100 million.
The Johannesburg Stock Exchange-listed logistics provider has been transforming from a portfolio of regional businesses to an integrated end-to-end logistics and market access business focused on Africa.
The aim of the restructuring was to leverage its scale, competitive advantages and capabilities in the health care, consumer, chemicals, automotive, industrial and commodities industries.
Imperial had previously assessed the strategic fit of its Logistics International business and had opted to exit the business in a phased approach, as it was non-core.
The South American shipping business had been held for sale since May 2020 and had been operated on a stand-alone basis since then.
The sale of the South American shipping business followed the disposal of the European shipping business, which was concluded on July 31, 2020.
Hidrovias do Brasil is an independent logistics provider focused on waterways services in Latin America and operates in large logistics corridors in the north of Brazil and in the Paraguay-Paraná river system.
In the Northern Corridor (Miritituba-Barcarena, Pará), Hidrovias do Brasil offers a logistics solution to transport grains from the midwest region of Brazil to an export port.
“The South American shipping business had been held for sale since May 2020 and had been operated on a stand-alone basis since then”
More than 6 million tons of cargo a year – including iron ore, grains, fertilisers, and pulp – are transported in the Southern Corridor.
Imperial expanded its shipping business in 2014 by entering the South American market with a presence through the South American shipping business in the Hidrovia-Paranha-Paraguay waterways and with access to the largest seaports in the region.
The business moves some 1.6 million tons of dry bulk cargoes every year, with the major clients being blue-chip industrial groups in the steel and agriculture industries.
The South American shipping business generated revenue and earnings before interest, taxes, depreciation, and amortisation of US$36 million and US$9.4m, respectively, for the year to the end of June 2020.
The agreed maximum enterprise value for the interest in the South American operations was US$90m which included an earn-out component of up to US$5m, which was payable dependent on water levels over four years, starting on January 1 this year.
The unaudited attributable loss after tax for the six months to the end of December last year was US$4.7m, and the unaudited net asset value as of December 31, 2020 was US$110.3m.
The proceeds of the transaction would be used to optimise Imperial’s financial position by reducing debt in the short term and to invest in new growth areas.
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