JSE-listed energy storage and automotive component manufacturing holding company Metair has reported that the group's net debt – including Hesto Harnesses Proprietary Limited and associated guarantees – amounted to about R4-billion as at December 31, 2024, the majority of which is classified as short term.

The company has notified shareholders that on March 10, the board of directors of Metair and Metair's lenders approved a capital restructuring plan designed to provide Metair with a more sustainable debt structure and appropriately aligned repayment terms.

In terms of the capital restructure, the group's lenders have agreed, in principle, to refinance Metair's current gross debt obligation, the majority of which is short term, by means of two separate packages.

This includes Hesto in an amount of R1.38-billion, to be used to refinance the existing R475-million facilities as well as to repay the disproportionate loan advanced to Hesto by its minority shareholder, Yazaki Corporation; and the remaining South African subsidiaries, in an amount of R3.3-billion, to be refinanced through a five-year senior debt of R1.7-billion comprising an amortising loan and a bullet term loan of R850-million, respectively, with the remaining R1.6-billion structured as a mezzanine instrument, repayable by June 30, 2027.

The company explains that a capital restructure allows for a repayment profile that matches expected earnings growth and cash flows over a period of five years.

It notes that management is closely monitoring debt levels and liquidity, with a priority to reduce debt and de-gear in the medium term.

In addition, the group is implementing a range of strategies to support de-gearing towards a sustainable capital structure and enhance earnings and cash generation, including effective cash management through, inter alia, the introduction of a centralised treasury function, various cost control measures, delaying non-critical capital expenditures and engaging customers for flexible support on capital investments for new models.

The mandatory prepayment provisions for both the Hesto Obligor and SA Obligor will be governed by specific terms outlined in the agreed term sheets, which remain subject to certain conditions precedent.

The company says it anticipates that all outstanding conditions will be fulfilled within the next two months.

Further information regarding the capital restructure, including the key terms of the Hesto Obligor and SA Obligor term sheets, will be detailed in the company's annual results and included in the company's 2024 Integrated Annual Report, both of which are expected to be made available on the company's website on or about March 26.