AECI, the JSE-listed chemicals manufacturer, on Friday announced a new R522 million Broad-Based Black Economic Empowerment (B-BBEE) transaction to strengthen the ownership credentials of its mining subsidiary, AECI Mining Limited.
AECI shares rose 1.69% to close at R95 on the JSE that day.
The B-BBEE transaction, a broad-based ownership scheme, involves the AECI Foundation subscribing for 73 586 835 B ordinary shares in AECI Mining at R7.10 each, totaling R522m. This gives the Foundation a 15.5% effective interest in AECI Mining, boosting its B-BBEE status to 51% black ownership per the Codes and 51% Historically Disadvantaged Persons ownership under the Mining Charter.
The Foundation, a Public Benefit Organisation focused on community development, will finance the deal with R182.7m in cash (35%) and R339.3m in notional vendor financing (65%) from AECI Mining, AECI said.
The B ordinary shares have voting rights equal to ordinary shares and economic rights linked to 15.5% of AECI Mining’s South African earnings. Valued at R522m, the transaction awaits B-BBEE verification and regulatory approvals, with an expected effective date of March 20, 2025.
PricewaterhouseCoopers Corporate Finance provided a fairness opinion confirming the deal’s fairness to shareholders, AECI said.
The announcement comes two days after the firm reported its results for the year ended December 31, 2024, showing a decline in earnings and as it undergoes a restructuring exercise positioning it for growth.
AECI has embarked on a comprehensive restructuring and divestment program to sharpen its focus on core business areas, particularly mining and chemicals.
Last year, the company advanced this strategy by signing sale agreements for non-core assets, such as AECI Much Asphalt and AECI Animal Health, with closures expected in the first half of 2025. These divestments aim to streamline operations, reduce debt, and generate cash flow to fuel growth in its primary segments.
Headline earnings per share declined 37% to 716 cents, with a basic loss per share of 268c, including a 531c loss from discontinued operations like the pending sale of AECI Much Asphalt. AECI reported a 3.8% revenue drop from continuing operations to R33.6 billion in 2024, primarily due to weak market conditions and low ammonia prices impacting AECI Mining, the main revenue contributor via explosives and chemicals. Earnings before interest, taxation, depreciation, and amortisation from continuing operations fell 12.7% to R3.03bn, hit by R873m in one-off costs tied to transformation and divestitures.
AECI’s CEO Holger Riemensperger said: "2024 has been a transformative year for the Group, with significant progress made against our strategy execution programme. While we made concessions that affected the Group's financial performance for the year, our progress and achievements to date in executing the strategy reinforce our confidence in our ability to meet our long-term strategic ambitions."
In its outlook, AECI said, "2024 has set a strong platform from which the Group can build and grow towards meeting its 2026 strategic ambitions. In 2025, our attention moves from the transition phase of our strategy to execution phase with an emphasis on driving hard cost savings, preparing for growth and focusing on free cashflow generation," it said.
It said it was continuing to position AECI Mining for growth and improved operational performance by maintaining the good performance momentum recorded in the fourth quarter of 2024, investing in growth capital as guided by the capital allocation framework, and internationalisation of the business with AECI Mining Chemicals at the forefront.
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