Of the amount advanced to AutoZone, R188,5 million is payable to Absa to settle the secured claim.
JSE-listed Metair has bought the South African automotive parts retailer, AutoZone through its subsidiary Nikisize.
AutoZone entered business rescue in July 2024 after facing financial distress caused by the effects of the Covid-19 pandemic, a challenging economy, civil unrest, and a period of stagflation.
The acquisition was announced on Tuesday in the Stock Exchange News Services (Sens) announcement from Metair.
AutoZone financial woes
AutoZone CEO Dion de Graaff said they started experiencing financial distress after the company’s private equity transaction in 2014.
De Graff detailed in an affidavit that they also faced increasing debt service obligations, diverting money from operations to these funding needs.
The deal comprises a nominal amount of share in AutoZone and R278,5 million advanced by Nikisize to AutoZone.
AutoZone’s debt to be serviced
Of the amount advanced to AutoZone, R188,5 million is payable to Absa to settle the secured claim.
“R15 million will settle pre-commencement unsecured creditors and R75 million to fund the working capital requirements of AutoZone.
“The acquisition enhances Metair’s ability to diversify strategically within the mobility and aftermarket sectors.”
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Shareholders were told that the acquisition aligns with the increasingly active used vehicle market in SA, as well as the anticipated opportunity for growth in the aftermarket parts.
“It provides Metair with an established distribution channel to grow its current automotive aftermarket businesses in Southern Africa.”
Metair manages an international portfolio of companies that manufacture, distribute, and retail products for energy storage and automotive components.
Why business rescue
De Graaff entered AutoZone in voluntarily business rescue because he believed the process would afford the company breathing space to allow its business practitioners to explore all the approaches and opportunities.
He was of the view that the company’s creditors or shareholders would benefit better from a business rescue, rather than an immediate liquidation of the company.
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How business rescue works
According to law firm Cliffe Dekker Hofmeyr, the business rescue provides a company with breathing space to restructure its affairs under the management of a business rescue practitioner who drafts a business rescue plan to take the business forward.
The proceedings aim to help a company in financial distress by allowing it to reorganise and restructure its affairs, assets, equity, debts, property, and liabilities.
NOW READ: Explainer: How business rescue works
