JSE-listed Aveng has entered into an agreement to sell Trident Steel as a going concern for R700-million, following what it acknowledges to have been a “protracted and difficult” disposal process that was first initiated in 2017.

The buyer is Trident Steel Africa (TSA), a company specifically formed for the acquisition, and which is funded by a consortium of local and US private capital, including Ambassador Enterprises, of the US, Joseph Investments, Arbor Capital Investments and Trident Steel’s management.

“The disposal of Trident Steel has been protracted and difficult, however the board and management are satisfied that this transaction represents the best value for Aveng and shareholders,” Aveng CEO Sean Flanagan said in a statement.

The proceeds generated from the transaction will be used to settle Aveng’s remaining R406-million South African debt.

The group had external debt of R3-billion when the turnaround strategy was first initiated in 2017; a strategy that involved noncore disposals with a combined value of R1.1-billion.

Flanagan expressed confidence that the business, which supplied steel products primarily to the South African automotive, rail and mining industries, was being sold to a “credible consortium” that could continue Trident’s growth trajectory and secure the future of its employees.

The purchase price of R700-million, plus an amount of R264-million which represented the cash portion from the business, as well as a monthly ‘ticking fee’ of R7.45-million, will be payable by TSA on or before the transaction’s closing date – the first day of the calendar month following the date on which the remaining conditions precedent, including competition authority approval, were fulfilled or waived.

Aveng would provide R210-million of funding to a separate company in order to subscribe for 30% of TSA equity, which will be warehoused for the earlier of either a year from the closing date or the finalisation of an empowerment deal.

Once the Trident disposal is concluded, Aveng will have two remaining core businesses: McConnell Dowell, which operates in Australasia and South East Asia, and Moolmans, which has contract mining activities in southern, central and west Africa.

Aveng is also considering a foreign listing given that a significant portion of the combined revenue of McConnell Dowell and Moolmans is derived from outside of South Africa.