Latest news with #DominicSewela
IOL News
26-05-2025
- Business
- IOL News
Barloworld's interim earnings drop amid onging Zahid Group takeover attempt
A 550 kVA Cat C15 diesel generator set being assembled at Barloworld Power's Boksburg facility. The group is experiencing tough trading conditions in line with macro-economic volatility in the markets where it operates, especially in its Russia business, where sales has decline due to the impact of sanction. Image: Supplied Barloworld, still the subject of a controversial takeover bid by Saudi Arabia-based Zahid Group and CEO Dominic Sewela, nearly halved its interim dividend to 120 cent a share (210 cents per share). This followed a 20.5% decline in headline earnings per share (HEPS) to 423.2 cents for the six months to March 31, with the results impacted by a weak performance in the Russia business due to the impact of sanctions in that country. Many JSE listed companies exited their businesses in Russia after the onset of the war in Ukraine, but Barloworld opted to retain Vostochnaya Technica (VT). Excluding VT, normalised HEPS was flat at 356 cents per share. Sewela said trading conditions were broadly aligned with their expectations of stable to modest economic growth, guarded optimism, moderated by cyclicality and subdued commodity markets. "Barloworld has shown remarkable resilience, especially excluding the VT results. The positive impact of the restructuring of Ingrain in 2024 is especially evident. We continue to navigate the evolving environment by pulling the levers within our control,' said Sewela in a statement. Regarding the Zahid takeover bid that was initially rejected by shareholders, an announcement about the requisite 90% acceptances from shareholders to be received in terms of a standby offer, or whether the bidding company wishes to waive the threshold, was expected to be made by June 30, 2025. Group revenue fell by 5.8% to R18.1 billion, weighed down by a significant reduction in VT revenue. 'The board remains vigilant in overseeing the investment in VT and will conclude and communicate an official strategy in due course,' the board said in the results.. Earnings before interest, tax, depreciation and amortisation (EBIDA) fell by 9.1% to R2.2bn. Excluding VT revenue EBITDA increased by 3%. The EBITDA margin fell to 12.4% from 12.9%. Excluding VT, EBITDA margin expanded from 11.9% to 12.5%. The group invested in working capital to support growth objectives and used free cash flow to reduce floor plans, which were more expensive than its available facilities. As a result, net debt increased by R1.6bn to R4.8bn. Net asset value per share increased to 9 235 cents from 9 111 cents. Solvency and liquidity remained strong. On the outlook, Sewela said that since the end of the first quarter, financial markets and commodities were very volatile, rapidly reacting to developments regarding US tariffs and associated uncertainties. 'In such an unpredictable environment, effective risk management and scenario planning are crucial, especially for complex supply chains as well as the fragile geopolitical state of affairs.' The board said several major South African mining corporations reported that, despite prevailing market turbulence, primary commodity trade routes were largely unaffected due to the exclusion of platinum group metals, coal, gold, manganese and chrome from tariff implications. 'We continue to assess the potential impact of tariffs on our iron ore, steel, and diamond customers.' Some reorientation and dislocation of physical trade flows was anticipated in the near future, which could present both opportunities and challenges for Barlworld's customers. 'The potential consequences of slower economic growth and a fragmented trading environment may be more significant. The future effects of tariffs on our business remains uncertain, and we are mapping out the medium- to long-term ramifications for our business,' the board said. The US Department of Commerce's Bureau of Industry and Security (BIS) had extended a deadline to September 2 for Barloworld to complete an investigation on potential export violations. VT's EBITDA fell 68.1% to R133 million. Operating profit of R104m decreased by 73.1% compared to the prior period. VT was expected to trade at breakeven levels as the structure was optimised for lower activity levels. VT was self-sufficient in terms of its funding requirements. EBITDA for Equipment Southern Africa fell 1.9% to R1.3bn. Operating profit declined 15.1% - the margin reduction resulted mainly from changes in the sales mix, from lower aftermarket activity.
IOL News
11-05-2025
- Business
- IOL News
Barloworld extends R23bn buyout offer amid shareholder delays
Barloworld Equipment. The Saudi Arabian consortium's bid for the Southern Africa-based Caterpillar dealer group has been etended to June 30, 2025. Image: Supplied The contentious buyout offer for Barloworld has been extended by more than six weeks because some brokers and financial services companies are delaying selling their clients' Barloworld shares in support of the offer. The stand-by offer for Barloworld shareholders to accept the R23 billion offer by Saudi Arabian firm Zahid Group in concert with Barloworld CEO Dominic Sewela, closed on Friday, again with insufficient shareholder support, but Barloworld's independent board has extended the offer to June 30. The initial offer for the international heavy industrial equipment and food and ingredient solutions group was first made in February 2024, but shareholders raised issues about transparency, possible conflicts of interest due to the CEO's participation, and some shareholders wanted a better offer than R120 per share, while the shareholder vote failed. 'Barloworld…understands certain Barloworld ordinary shareholders have been unable to tender their shares into the standby offer through their CSDPs (Central Securities Depository Participants) or brokers,' the Independent Board said on Friday. The company said it had received several inbound queries from its shareholders who indicated to their CSDPs or brokers that they wished to accept the standby offer, but had been advised that they would only be able to do so at 'a later stage,' the board said. The board stated there was 'no lawful basis' for a CSDP or broker to delay accepting the standby offer on behalf of their shareholder client, and CSDPs and brokers 'must review their processes to ensure that instructions in relation to the standby offer are processed without delay.'
IOL News
23-04-2025
- Business
- IOL News
Public Investment Corporation accepts Zahid Group's R23bn bid for Barloworld, with conditions
A 550 kVA Cat C15 diesel generator set being assembled at Barloworld Power's Boksburg facility. The government-owned Public Investment Corporation has agreed to the Saudi Arabia-based Zahid Group's takeover offer of R120 per share, on condition a BEE scheme is implemented at the group. Image: Supplied The Public Investment Corporation (PIC) has accepted Saudi Arabia-based Zahid Group's $1.3 billion (R23bn) bid for Barloworld Group, but has set conditions to address its public interest concerns around the deal. The Zahid Group has proposed a R120 per share offer, which was a 30% premium on the share price at the time of the offer, but shareholders initially voted against the bid amid claims of governance irregularity, due to the participation of its CEO Dominic Sewela as part of the takeover consortium and claims of lack of transparency in the transaction, and despite the group's assertion that there were now governance breaches. However, in terms of the standby offer made in February, engagements took place between the PIC, and the PIC undertook to accept the standby offer of the R23bn acquisition of Barloworld, a statement said Wednesday. The PIC, the State-owned asset manager that manages primarily the Government Employee Pension Fund, owns 41.59 million shares in Barloworld, representing about 21.93% of the shares in issue. This means that shareholders holding 46.93% of Barloworld's shares have now undertaken to accept the standby offer. To address the PIC's broader public interest considerations regarding the offer, the bidding company said it would implement a 13.5% broad-based black economic empowerment transaction in Barloworld, after the delisting of Barloworld from the JSE and A2X. The commitment to implement the BEE transaction will only apply if the bidding company's squeeze-out right under section 124 of the Companies Act becomes capable of being exercised. This right allows a majority shareholder holding more than 90% of the shares, to compulsorily acquire the remaining shares from minorities. The bidding company will also offer the implementation of the BEE transaction to the competition authorities as a merger condition, failing which PIC's irrevocable undertaking may be terminated. The Independent Board established to oversee the transaction wrote in February: 'that management-led buyouts are not unusual in capital markets. Whilst recognising that such transactions do present an opportunity for conflict of interest in relation to the management members involved, the Independent Board also recognises that if properly managed, they could result in positive outcomes for shareholders of the company.' In the 5 months to end February, Barloworld's equipment Southern Africa operations saw its revenue decline 9% to R8.8bn, while earnings before interest, tax, depreciation and amortisation (EBITDA) fell 6% to R949m. The declines were ascribed to a slow recovery in the mining sector and the impact of civil unrest in Mozambique. In the group's Russia business, revenue fell 25.3% to $60.3m, while EBITDA fell 83% to $2.3m due to lower activity levels and curtailed inventory supply. Barloworld's share price surged 3.5% on the JSE on Wednesday morning, at a time when the JSE All Share Index was up by only 0.9%, following the announcement of the PIC's plan to accept the R120 per share offer for its Barloworld shares. BUSINESS REPORT
