JSE-listed energy and automotive manufacturing holding company Metair has finalised the acquisition of automotive parts distributor AutoZone for R278.5-million after the remaining conditions precedent were approved and finalised, namely approval from the South African competition authorities, Metair lenders' consent and counterparties to certain AutoZone contracts consenting to the acquisition.

Additionally, all regulatory filings from AutoZone's business rescue practitioners have also been made, the company said in a statement on December 17.

The acquisition enhances Metair's ability to diversify strategically within the mobility and aftermarket sectors. It aligns well with the increasingly active used-vehicle market in South Africa as well as the anticipated opportunity for growth in the aftermarket parts market.

It provides Metair with an established distribution channel to grow its current automotive aftermarket businesses in Southern Africa, Metair said.

Through its subsidiary Nikisize, the company acquired the entire issued share capital of AutoZone, which comprises a nominal amount for the acquisition of the shares in AutoZone and an aggregate amount of R278.5-million advanced by Nikisize to AutoZone.

Of this amount, R188.5-million is payable to financial services firm Absa to settle Absa's secured claim, R15-million to settle pre-commencement unsecured creditors, and R75-million to fund the working capital requirements of AutoZone.

As reported in Metair's interim results for the six-month period ended June 30, 2024, its net debt amounted to R5.5-billion, which included the debt and guarantees associated with Hesto Harnesses, in which the group holds a 75% ownership stake.

Management has been focused on optimising and deleveraging its debt position. Metair's board of directors, with support from external lenders, has approved a temporary restructuring of Metair's debt through an extension of the existing Bridge Facility from Standard Bank.

This facility was created in July to rebalance a portion of the Hesto shareholder debt of Yazaki Corporation amounting to $38.1-million.

The extended bridge facility will be used for the redemption of preference shares of R840-million, which are due on December 17, R278.5-million relating to the acquisition of AutoZone and an additional $10-million to further rebalance the Yazaki shareholder loans.

Metair's debt facilities funders have consented to the plant and, with full support from the funders, an executable final optimal capital restructuring of Metair will be presented to its board and the funders before March 31, 2025, the company said.

Further, in terms of the disposal of Metair's Türkiye operations, on November 7, the Turkish Competition Board confirmed that its consent is not required in respect of the disposal.

Implementation of the disposal remains subject to the fulfilment or waiver of the remaining condition, namely the execution by the relevant Mutlu Group companies of a new financing agreement with Turkish bank or banks to be agreed with the buyer.

"Economic conditions remain challenging but good progress has been made with the closing date now expected before the end of December 2024," Metair announced

The disposal consideration for its Türkiye operations of $110-million was subject to customary adjustments based on Mutlu Group's net debt and working capital amounts on the closing date.

"Mutlu Group's debt and accounts payable has increased substantially since September as a result of the requirement to fund operations in the continued challenging hyper-inflationary and high-interest rate environment. It is currently expected that net proceeds of approximately $5-million will be realised.

"While Metair is disappointed that the final aggregate consideration is expected to be less than envisaged, the group believes that the disposal is a critical element of Metair's successful turnaround."

The Mutlu Group accounted for approximately 73% of Metair's total interest cost and 23% of Metair's net debt for the six months ended June 30 and it was essential to mitigate against the increasing financial volatility of and exposure to the Mutlu Group.

"Metair will now also be able to focus more comprehensively on its growth and diversification strategy in the mobility sector," the company highlighted.