Archive of previous transactions

 

DIVESTITURE OF TRANSNET'S FLEETCALL ANNOUNCED
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The Government of South Africa, through the Department of Public Enterprises (DPE), has issued a request for Expressions of Interest (EOI) to acquire the entire share capital of Fleetcall (Pty) Ltd ("Fleetcall").

The DPE, through Transnet Ltd. is the owner of 50% of the issued share capital of Fleetcall. A local company, Grintek Group Ltd., is the owner of the other 50%. Grintek is an electronics and IT firm (JSE ticker symbol GNK). Fleetcall is a land mobile radio trunking network that provides voice and real time data calls via its service providers. Transnet and Grintek have decided to sell 100% of their shareholding in Fleetcall to a buyer with black economic empowerment shareholding.

The sale process of Fleetcall will be comprised of two stages: a) expression of interest and review of qualifications; and 2) a binding proposal from short-listed bidders.

The prequalification document (for the EOI) is available for a fee of R100.

Preliminary information on the company is available on the Fleetcall website:

www.fleetcall.co.za


A briefing for interested parties will be held on Monday, 23rd September at the offices of Transnet on the 46th Floor of the Carlton Centre, Johannesburg.

PGi can be retained to obtain the pre-qualification documentation, and provide a written summary of the briefing.

 For additional information, contact:

Jeffrey L. Jackson
Johannesburg, South Africa
Tel: 27-11-325-4452
Email: jeffjac@global.co.za

 

Partial Privatization of Roshcon Announced
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On June 5 the Government of South Africa launched in Johannesburg a road show to re-start the partial privatization of Roshcon, which was aborted a few months ago after the bid process did not yield the expected results. Roshcon, a subsidiary of Eskom Enterprises, comprises divisions in the waste management, electrical infrastructure and civil engineering areas. The process is open only to ‘empowerment’ entities.

Roshcon

Roshcon consists of three operating divisions, namely Infrastructure, Waste Environmental and Bulk Materials (“WEB”), and Civil Engineering. These units comprise 60%, 20% and 20% of turnover respectively.

Infrastructure carries out civil and electical & instrumentation (“EI”) contracting. The Civil division is active in road, township infrastructure and general civil engineering construction. The EI division is the largest of the operational areas and is major player in electrical infrastructure construction in Southern Africa. Its construction capabilities cover electrification, distribution, transmission and heavy cabling services for mining, industrial commercial applications. The division does not exclusively operate in the South African market but has had some successful contracts in Tanzania, Uganda and Zambia

WEB is active in waste storage and transport, environmental services and bulk materials. Services include industrial and household waste transport and landfill management as well as the management of mine wastes and slimes dams. A higher preparation of revenue comes from the operation as dry ash dumps at five Eskom sites.Environmental services include pollution and vegetation control and the rehabilitation of wastes sites. Bulk materials cover coal stockpiling and reclaiming, which is carried out at four Eskom power stations.

There is a 20-year contract with Samancor for the recovery of residual ferro-and silico-manganese from the waste dump at Samancor’s operation in Meyerton.

There is a Plant operating area that manages all mobile plant and equipment for the WEB, Civil and Materials division on a “break-even after interest” basis. It currently supplies 40% of the company’s requirement for plant.

Turnover in the last fiscal period was R390 million. EBIT was R23 million. The company has approximately 180 full-time employees.

Structure of the Transaction

The Government intends to sell an immediate 26% equity stake in the company. A further 25% of the equity will be made upon the achievement of certain conditions. These ‘conditions’ will be agreed with the preferred bidder.

Timetable

The transaction advisor will make a “Request for Expression of Interest” (REOI) on June 14, 2002. Responses to this requests will be due on the 25th of June. Thereafter it is expected that a Request for Proposals (RFP) will be submitted to those successful respondendents to the REOI and non-binding offers will be due on July 12, 2002.

 

LAND AND PROPERTY TO BE SOLD
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1. Telkom

Telkom SA Ltd. has announced the intended sale of a "substantial portion of the property portfolio" of the partially state-owned entity. The company has invited potential investors to provide preliminary submissions to negotiate the outright sale of these properties as well as use rights through lease agreements.

Documents are only available from Telkom's tender office in Pretoria until 13th September. There is a non-refundable fee of R50,000 Rands (VAT inclusive) to obtain the Information Memorandum, which is available at: www.telkom.co.za.

Submissions will be accepted until 22nd October, 2002.

2. National Roads Agency

Intersite, the property management agency of Transnet and the South African National Roads Agency (SANRA), has announced the sale of two vacant farms on behalf of SANRA. These farms are located in the Florida Glen area of Gauteng, and comprise areas of 8016 sq. m., and 9,124 sq. m.

There is a non-refundable fee of R500 (each) to obtain the tender documents, which are available from 30th September to 2nd October, 2002. Binding offers are due on 11th October.

 

PRIVATIZATION/RESTRUCTURING OF ROTEK INDUSTRIES
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Background to the Transaction

The Government of South Africa has recently announced its intention to restructure, via a partial privatization, Rotek Industries, which comprises two business entities, Rotek and Roshcon. Rotek Industries is a wholly owned subsidiary of Eskom Enterprises. Eskom, which is South Africa's publicly owned electricity generation and distribution business, created Eskom Enterprises to house the parastatal's non-generation businesses.

The Government of South Africa is offering for sale an equity interest in the sale assets to a "strategic equity partner" (SEP). The SEP may submit offers for either Rotek or Roshcon, or both. The target shareholding structure for each entity after the transaction is based on 30% of the equity being sold to the SEP. A further 10% will be sold to a "black economic empowerment" (local South African company owned by members of historically disadvantaged persons) in a separate process.

Rotek and the South African Government are seeking a SEP that is able to contribute to the development of the companies through the provision of capital, technology and processes, management skills and markets.

 

Rotek Engineering

Rotek maintains repairs and refurbishes power generation and transmission equipment and supplies related services. It operates through three divisions:

§         Power Distribution Services performs transformer and switchgear maintenance and refurbishment

§         Turbo Machinery Services provides maintenance and refurbishment for turbine generators

§         Bulk Water Services provides maintenance services to water schemes and is principally involved in bulk water schemes and not domestic water and sewer reticulation.

 Roshcon

  Roshcon is a diversified engineering business comprising:

§         Electrical Infrastructure, which has involved regional projects in Southern Africa;

§         Civils, which involves civil engineering services provided to municipalities and townships;

§         Waste, Environmental and Bulk, involving waste transportation and management, including landfills; and

§         Materials, which involves conversion of waste products for recycling and future use.  

Timetable

7 September
13 September
28 September 
15 October 
15 October
22 October 

Issue of RFQ
Presentat ion for Bidders  
Submission of Expressions of Interest 
Announcement of Shortlisted Bidders 
Detailed Information Memorandum Available 
Due Diligence to Commence

PRIVATIZATION OF SAFCOL NON-FOREST ASSETS
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Background to the Transaction

In 1999, the Government of South Africa made available for acquisition, via long-term leasehold, the forest assets of the South African Forest Company (Ltd) inclusive of certain forest assets of the Department of Water Affairs and Forestry (DWAF).  That process, which included 335,000 hectares of forests and associated mills, was divided into seven parcels, was not concluded in its entirety.

SAFCOL was incorporated in 1992 as a public company with the Government of South Africa as a public company with the Government of South Africa as the only shareholder.  The state's commercial interest in forestry and timber processing were transferred to SAFCOL with effect from April 1993.  The DWAF forests comprise the forestry assets which were ceded to the former 'independent states' and self-governing homelands under the previous Government.

SAFCOL invites interested parties to submit their non-binding "Expression of Interest" for any or all of the following transactions.  An Information Memorandum will be made available upon receipt of a non-refundable deposit payable to SAFCOL, as well as the signing of a Confidentiality Undertaking with SAFCOL.

Lakenvlei Forest Lodge and Conference Centre

Located on the province of Mpumulanga, the Lodge is situated in a 'Natural Heritage site' amidst 4,500 ha. of pine forest, approximately 10 km north of the town of Belfast.  The Lodge comprises 12 luxury cottages, an equestrian center, and a conference center with a capacity of up to 30 people.  Other amenities include a licensed restaurant, pub and administrative offices.

Frankfort Avocado Estate

This business comprises an orchard of 120 ha. in extent, as well as an additional 105 ha. currently planted with Eucalyptus.  The cultivars in the orchard include Fuerte, Hass, Pinkerton and Ryan.  The trees are from Duke 7 rootstock,  planted on a spacement of 5m x 5m.  There is also a micro-irrigation system.

The objective of the transaction is a sale of the business as a going concern.  The land, however, will be only be made available on a long-term notarial lease.

Shannon Properties

Situated near Barberton close to the border with Swaziland, the Shannon Properties consist of 7,300 ha. of Eucalyptus on the 12,000 ha plantation.  This plantation purports to offer a stable long-term cash flow.  Currently, the plantation is leased to a third party.  An outright sale of the property on a going-concern basis is contemplated.

Timetable

Expressions of Interest should be submitted no later than January 31, 2002.

Gautrain Rapid Rail Link (Public Private Partnership)
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The Gauteng Provincial Government intends to establish a rapid rail link between the Johannesburg city center, the Sandton CBD and the Johannesburg International Airport. The province of Gauteng accounts for some 40% of South Africa's GDP, and is effectively the economic fulcrum of the country. 

Johannesburg, home of the continent's largest stock exchange and largest banks, is fast becoming the de facto commercial and financial center of Africa.

The project will be in the form of a Public Private Partnership ("PPP") as governed by the relevant Treasury regulations promulgated by the South African Government. Companies and consortia seeking to be pre-qualified to submit a tender for the project must meet the pre-qualification requirements contained in the Request for Qualifications (RFQ).

Entities pre-qualified to participate further in the process will be notified of their status and invited, through a call for proposals, to submit a bid for the design, construction, finance and operation of the Gautrain Rapid Rail Link. The successful parties will conclude a PPP concession agreement.

The closing date for submission is April 5, 2002 at noon, South African time. Contact PGI for additional submission details. The cost of the RFQ is R500 (approximately US$ 45.00)

Second National Fixed-Line Telephone Operator

("SNO")

In May 2002, the monopoly of South African fixed line telephone system operator (Telkom) comes to an end. There are plans to list Telkom on the Johannesburg and New York stock exchanges later this year, market factors permitting. The Government currently owns 70% of Telkom.

Although not finally agreed, it is almost certain that the South African Government will reduce its shareholding in Telkom below 50%, and liberalize the market in other ways.  A second national fixed line operator will be allowed to compete against Telkom.

The basic infrastructure for such a second operator already exists in the form of networks owned by two other parastatals: Eskom (the electricity generator and distributor) and Transtel (owned by Transnet, the transport parastatal). It is assumed that any second system to compete with Telkom would include some or all of these networks.

Depending on the regulatory environment, which is not finalized, the advent of a competitive environment will open up the market to a wide range of value added services.

The process is not formally underway, but many firms are already on the ground conducting market research and developing key relationships to go forward.

Additional information is available at the following web sites:

www.sno.co.za

www.docweb.pwv.gov.za 

 

Alexkor Diamond Mining Concessions
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Alexkor, the Government-owned diamond mining company, has announced that it is seeking interested parties to apply for the right to recover diamonds from their shallow water and beach concession areas.

Shallow Water Concessions

The concession areas under consideration are the 1(a), 2(a), 3(a) and 4(a) concessions.  Applications will be evaluated based on the following criteria:

1.      Compliance with all legal requirements

2.      The technical ability and experience of the applicant regarding diver operated mining

3.      Empowerment of the historically disadvantaged communities

4.      Access to and availability of equipment and financing

5.      Participation of retrenched Alexkor workers

6.      Involvement in current shallow water contracts.

Beach Concessions

These concessions involve the right to collect diamonds from the beaches of Alexkor, adjacent to the 1(a), 2(a) and 3(a) shallow water concessions.

In addition to the above criteria, bidders will be expected to have an acceptable rehabilitation plan.

The deadline for submissions is May 31, 2002.  Tenders should be delivered to:

The Company Secretary
Alexkor Ltd.
Private Bag X5
Alexander Bay, 8290
South Africa

 For additional information, contact:

Jeffrey L. Jackson
Johannesburg, South Afric
Tel:
27-11-325-4452
Email: jeffjac@global.co.za

Alan Bowse
Silver Spring, Md
Tel:
1-3-1-608-393 
Email: asblaw@aol.com

 

Agriculture Sector and Agribusiness
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Deloitte Touche Tohmatsu Emerging Markets Group (EMG), with funding from the U.S. Agency for International Development (USAID), is providing technical assistance to the Government of  South Africa to enable the privatization of agriculture sector assets.  The intent is to involve local farmers and businesspersons to the extent possible.  These are typically small transactions and are aimed at local investment.  However, any foreign interest is welcome.  Contact details for EMG are found below.

Purchase of  Silo from the Department of Agriculture Conservation and Environment (DACE)

The Vryhof silo is situated on the Mafikeng/Vryburg railway line approximately 30 kilometres from Mafikeng. Erected in 1979, it has a storage capacity of 101, 000 tons. Emerging farmers in the area  grow reasonable quantities of maize on about 15 hectares each and used the services of the silo.

The farmers were operating viably until the 1994/95 season when the Agribank closed. With the closure of the bank, the farmers were no longer able to access loan financing and all commercial operations ceased.

Lease of Kraaipan Silo

Kraaipan Silo is also situated on the Mafikeng/Vryburg railway, but some 55 kilometers from Mafikeng. It was built in 1982 to cater for the production of maize on 30,000 hectares in the Setlagole Dry land Development project. The project never materialized due to political problems among the local chiefs and the silo has been a "white elephant" since its construction and has never really been used.

Lease of Springbok Silo

Springbokpan Silo situated on the Litchenburg Blue Circle private railway line near Itsoteng about 65 kilometers from Mafikeng was erected in 1983 for the members of the Shiela Co-op and farmers in the Springbok Village area. The Shiela Co-op provided assistance with extension services, seed, fertilizer, and credit. The Co-op ceases to exist in 1994 and the silo continued to operate at a very low level for a few years. The silo is not now in use.

Mimosa Nest Poultry Farms  (West and East)

Mimosa Nest Poultry Farm West Poultry Farm West is an egg production facility consisting of 24 hatching houses that should accommodate approximately 40, 000 hens. The facilities also include feeding equipment, egg sorting and packaging facilities, storerooms, and offices. The facility has ceased all operations, but has three or four staff still employed by DACE. The property is run down and will need some expenditure to be restored to useable condition.

Mimosa Nest East is currently operational and has a stable market for its eggs to Sun City and the surrounding resorts. A group of farmers has been operating the facility for several years with assistance from DACE. Profits have been retained with the business and are available as start-up funding.           

Dinokana  and Molatedi Irrigation Schemes

Dinokana Irrigation Scheme is situated in the Lehurutshe area. It consists of 110 hectares of which 40 are currently under irrigation. Four hectares are planted with peach trees. Currently a group of farmers is farming the irrigated land and a group of women are operating a nursery in the greenhouses.

The Molatedi Irrigation Scheme is situated in the Molatedi area. It is a small scheme of 36 hectares.

For additional information, contact:

Wendy Clements
Project Manager
Deloitte Touche Tohmatsu EMG
Private Bag X6 Gallo Manor
Republic of South Africa

Tel: +27-11-806-5408
email: wclements@deloitte.co.za

 

Agrichicks (Pty) Ltd.(In Liquidation)
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Background

Agrichicks (Pty) Ltd. (APL) is a private company registered in the Republic of South Africa involved in the business of poultry farming and processing. The farms, feedmill and processing plant are located in the Northwest Province. APL is asserted to be the 4th largest poultry producer in the country. The principal customers are local and regional distributors. APL currently has no contracts with the large chains or fast food outlets (e.g., KFC or Nando's).

Due to stiff competition and a cyclical market, the company came under severe financial pressure in the late 1990's and was placed under judicial management in 1999. In spite of a substantial effort to sell the business, a successful sale has not been concluded to date, although there have been several bona fide offers. However, these offers were refused by the government due to a number of perceived deficiencies.


Situation Analysis

The business of Agrichicks (APL) appeared to be operated on sound principles and practices, but the operational model and forward planning essential to survival of the business could only have been done after the company was out of judicial management, a situation which never developed. Long-term contracts, foe example, could not be arranged with potential customers (mines, chain stores, food outlets, etc.) and suppliers (e.g., maize) due to the uncertain nature of creditors' positions and the possibility of a liquidation.

Due to location and distribution issues (i.e., distance from markets), APL only produces frozen whole chickens and chicken parts/pieces (IQF: individual quick frozen).

The business comprises:

• Hatchery/Breeders (3 farms)
• Growers (on 73 contract growers)
• Feedmill
• Processing plant

The capacity of the processing plant is 550,000 birds/week. Recently, throughput was about 250,000 birds/week or 50% of capacity. This was insufficient to justify the normal two shifts. The current situation results from a lack of feed, which reduced egg production and thus the required number of DOC (day-old chicks). Additional DOC could not be purchased from outside due to the lack of capital.

The capacity of the feedmill is 2,500 tons of pellets and mash feed per week, which equates to 130,000 t/year. The mill requires about 80,000 tons of maize annually.

Relations between APL and its growers were under strain for a number of reasons, most resulting from the unreliability of the feedmill. The feedmill was under pressure due to a number of internal (lack of capital expenditure) and exogenous (input prices) factors. These factors have resulted in unreliable product quality and delivery.

Turnover of APL is on the order of US$ 25 million/year. The assets, including machinery, plant and equipment are in reasonably good condition. The feedmilll would require immediate capital improvements of approximately US$ 100,000.

Transaction

The business is now in provisional liquidation, and it is the desire of all parties to sell the business as a whole rather than in parts. Depending on the nature of the transaction, the assessed tax loss might be a part of the transaction and reduce any tax payable for several years.

A due diligence and financial proposal has been prepared and could be made available through PGi if investors demonstrate a serious interest in the business.

The liquidation has no doubt reduced the expectation on the part of government, which had an expected valuation in excess of 100 mn. South African Rands (about US$10 million). An offer in the US$ 5-6 million range might be successful.

 

Disposal of Aventura Resorts
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The Department of Public Enterprises has announced the intention to dispose of Aventura Resorts and has called for an expression of interest from interested parties. Aventura (currently operated by Protea Hotels) is the largest operator of self-catering holiday resorts in South Africa. Prior to the restructuring process, Aventura owned and operated fifteen resorts, which generated a turnover of over R200 million. The company provides hotel accommodation at two resorts, Badplaas and Warmbaths. The remaining resorts are primarily focused on self-catering accommodation (chalets), camping and caravan facilities. The following resorts will be sold:

  1. Aventura Warmbaths: situated in the lower part of the Limpopo Province (formerly the Northern Province) 112 km north of Pretoria, this resort comprises a hotel, chalets, caravan parks a conference center spa and various recreation facilities. [Extent: 685 hectares; employees: 276]
  2. Badplaas: this resort is situated at the foot of Mpumulanga's Hlumuhlumu Mountains, 283 kms east of Johannesburg. This resort includes a hotel, guesthouses, caravan and camping sites conference facility and various related retail facilities. [Extent: 2,180 hectares; employees: 308]
  3. Plettenberg Bay: situated in the Western Cape Province, this resort contains chalets, caravan and camping sites and conference facilities. It is on the popular "Garden Route" of South Africa. [Extent: 14 hectares; employees: 26]
  4. Blydepoort: situated in Mpumulanga Province, this resort is in close proximity to many stunning geographic features of the escarpment and the Blydepoort Canyon. This property contains a guesthouse, camping facilities a youth hostel and a variety of recreational facilities. [Extent: 294 hectares; employees 124]
  5. Swadini: Also located in Mpumulanga Province, this resort shares the same geographic region as Blydepoort along the Blyde River Canyon. This resort is built around chalets, but also includes a caravan park conference and meeting facilities and recreational and sport facilities. [Extent: 110 hectares; employees: 97]
  6. Tshipise: Located close to the northern border with Zimbabwe, this facility has ronadvel-shaped chalets, a guesthouse and various camping facilities. It also caters for conferences and game viewing. [Extent: 1,902 hectares; employees 118]
  7. Gariep: situated on the banks of the Gariep Dam, this resort has chalets, a guesthouse and camping facilities. [Extent: 360 hectares]
  8. Loskopdam: surrounded by the Waterberg Mountain range and a nature reserve in Mpumulanga, this facility comprises chalets, camping facilities, recreation facilities and retail shops. [Extent: 517 hectares; employees: 120]

 

Resort
Chalets
Caravan Sites

Heated Pool

Restaurant(s)
Hotel Rooms

Warmbaths
Badplaas
Plettenberg
Blydepoort
Swadini
Tshipise
Gariep
Loskopdam

Total

94
145
21
93
78
96
50
68

645

194
270
78
33
180
374
112
254

1,495

Yes
Yes
Yes
No
Yes
Yes
No
Yes
Yes
Yes
----
----
Yes
Yes
Yes
Yes

45
49
--
4
--
--
4
--

102

Bidders may bid for Aventura Resorts as a going concern or individual resorts. Interested parties may obtain an Information memorandum through PGi.

Non-binding expressions of interest (EOI) are due no later than 4th November, 2002.


For additional information and details, contact:


Jeffrey L. Jackson
Johannesburg, South Africa
Tel: 27-11-325-4452
Email: jeffjac@global.co.za

 

Ncora Irrigation Scheme
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The Government of South Africa, through the department of Public Works, has invited proposals from suitably qualified firms, which are interested to partner with the Ncora Qumanco Trust to operate the irrigation scheme.

Ncora Irrigation Scheme is one of the largest community-owned irrigation schemes in the Eastern Cape. Situated in the Cofimvaba district, the scheme is approximately 80 km from Queenstown. The provincial department of agriculture, along with other local and regional governance structures are engaged in the process of restructuring the irrigation scheme into a viable business entity comprising dairy, cropping, milling, workshop and a guesthouse facility. The irrigation scheme services about 5,000 ha of land, of which 3,500 ha are under irrigation. The physical infrastructure includes equipment and buildings.

The Department of Public works and provincial government are prepared to look at a range of options, including public-private partnerships, contract farming and others. Community involvement is essential.

The terms of reference and other documentation are available for a fee of R600 (non-refundable).

A compulsory site inspection is scheduled for Friday, November 15.

The closing date for submission of proposals is November 29 (Friday) at 1600 hrs, local time.


For additional information and details, contact:

Jeffrey L. Jackson
Johannesburg, South Africa
Tel: 27-11-325-4452
Email: jeffjac@global.co.za

Alan Bowser
Silver Spring, Md.
Tel: 1-301-608-3932
Email: asblaw@aol.com

 

Restructuring (Disposal) of Commercial Forestry Plantations
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Expression of Interest

The Government of South Africa, represented by the Department of Water Affairs and Forestry (DWAF) has announced the intention to restructure/dispose of the remaining commercial forestry plantations, also known as the "Category B Plantations." These packages of plantations are:

Province

Limpopo

 

Mpumulanga

Kwazulu-Natal

 

 

Eastern Cape

Package

1. Phipidi
2. Rossbach
3. Voorspoed

4. Injaka

5. Mbazwana and Manzengwenya
6. Qhudeni and Nkonisa
7. Sokhulu
8. Mtuzini
9. Kwagubeshe
10. Hlokozi

11. Amanzamnyama estate
12. Ntsubane
13. Flagstaff
14. Bizana
15 Etwa estate (Pine)
16. Etwa estate (Gum)
17. Ntywenka
18. Nomadamba estate
19. Cofimvaba Estate
20. Katberg estate

DWAF seeks to encourage the involvement of previously disadvantaged persons, companies and local communities in this process.

Interested parties should submit an Expression of Interest (EOI) to be included in the database of potential bidders. The invitation to bid will be issued in February 2003.

The EOI must be no more than two pages in length and should contain:

· Short background of the bidder
· Identification of which plantation(s) are of interest
· Business objective
· Complete contact details, including a contact person(s)

The closing date for the EOI is 17 January 2003.

.
For additional information and details, contact:


Jeffrey L. Jackson
Johannesburg, South Africa
Tel: 27-11-325-4452
Email: jeffjac@global.co.za

Alan Bowser
Silver Spring, Md.
Tel: 1-301-608-3932
Email: asblaw@aol.com

 

Komatiland Forests (Pty) Ltd
Call for
Expression of Interest
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The Government of South Africa, represented by the Department of Public Enterprises, has announced a process to sell a majority interest in Komatiland Forests (Pty) Ltd. Komatiland Forests is currently s wholly owned subsidiary of the South African Forestry Company Ltd. (Safcol). Seventy five percent (75%) of the shares in and claims against Komatiland will be offered for sale.

This is the second sale of this state-owned enterprise. The first sale, concluded at R335 million, was cancelled due to certain improprieties on the part of the winning bidder. (For additional information, refer to issues 8 and 9 of PGi's monthly newsletter, "Privatization Review.")

The company includes approximately 130,000 hectares of commercial plantations (90% softwoods and 10% hardwoods), located in the South African provinces of Mpumulanga and Limpopo (formerly, Northern Province). The principal assets also include two sawmills, a veneer slicing plant and an export processing facility.

The successful bidder will of necessity be required to include a local "empowerment" partner. This participation should not be less than 10%. Certain "Black Economic Empowerment" (BEE) companies and consortia have already expressed their interest in the acquisition, and this list can be made available to prospective investors.

The EOI pack is available free of charge upon application. The deadline for submission is January 17, 2003.

 

Ethekwini Municipality (Durban)
Department of Transport
Provision of Mass Transit (Bus) Transportation

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The Ethekwini Municipality has called for Expressions of Interest (EOI) from "individuals, companies, organizations and consortia with the necessary skills and experience" to provide one, several or the entire route network currently serviced by Durban transport.

There will be a compulsory site meeting on Tuesday, February 11 2003 at 10:30 am at the Durban City Hall.

The tender documents are available for a fee of R500.00 (non-refundable).

The deadline for submission of Expressions in February 25, 2003 at 1100 hrs.

 

City of Cape Town to Privatize the Athlone Power Station
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The City of Cape Town (CT) owns and operates the Athlone Power Station which was formally commissioned in 1962 comprises six units with a nominal capacity of 30 MW each. Athlone was developed primarily for coping with the growth in demand for power at the time and to supplement the power supplied by the city's other station at Table Bay and power provided by national supplier Eskom. In 1973 the power supply situation was augmented when Eskom constructed two high voltage transmission lines to supply Cape Town.

Athlone is currently operated principally to minimise power purchases from Eskom by running it as a peaking station together with the Steenbras Power Station and two gas turbines. Athlone also provides a measure of emergency back-up in the event of national system failures.

Cape Town's advisors have estimated that without new investment, the station will have to be closed down within the next two years. This would result in a loss of employment, power security and flexibility, and would also negatively impact Cape Town's future options regarding supply and tariffs.

Between 1985 and 1994, Athlone was held on 'standby' pursuant to an agreement (Capacity Allocation Agreement) with Eskom. Studies conducted by Merz and McLellan in 1994, based on projected Eskom tariffs and other parameters, indicated that Athlone would be viable over a 25-year period and recommended resumption of operation. In January 1995 the Eskom agreement was phased out and full-time operation of Athlone was resumed.

It should be noted that Athlone is of dated design and is thus not of high efficiency. For these reasons the nominal power output of the station was reduced from 180 MW to 120 MW by decommissioning turbines 1 and 2, thus avoiding major capital expenditure. Repairs to the boiler plant are held to a level just adequate to serve the reduced capacity. In order to resume full operation at its design capacity, the plant will require significant upgrading.

Power Demand

The current maximum power demand in the Cape Town area is approximately 2,100 MW. Of this, Eskom provides 500 MW directly to consumers and the balance (1,600 MW) is supplied by the municipality's distribution system. Cape Town generates 358 MW of this amount, which is comprised of supplies from Athlone (120 MW), Steenbrass (160 MW) and gas turbines (78 MW).

It is estimated that power supply demand growth is 3% per annum. The anticipated restructuring of the electricity supply industry in South Africa (refer to Privatization Review newsletters) is likely to lead to increased competition on the supply side, while concurrent increase in demand will lead to a requirement for additional investment in this sector.

The transaction advisor appointed by the Cape Town municipal government has analysed various restructuring and sale options, and has recommended the IPP (independent power producer) option. Their studies indicate that a fully refurbished Athlone Power Station can be financially viable as an IPP under specific operating regimes and tariff assumptions.

The contemplated transaction is for the coal-fired stations only.

Solicitation documentation is expected to be made available in March, 2003.


Update: Expression of Interest for Category B Forestry Plantations
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Due to the high level of interest expressed by community-based organisations, The Department of Water Affairs and Forestry (DWAF) has been consulting with the Department of Land Affairs and the Ingonyama Trust, (as registered owners of land in KwaZulu Natal), regarding how to facilitate community participation in this process.

What has been agreed in principle is that Government will consult with communities in each area to clarify their interest in the forests, and identify their position with regard to bringing in private sector partners to manage the forestry industry businesses. This will be done before any further steps are taken in the tender process. We regret that this may result in significant delays in some cases, however we urge all parties to recognize the development nature of this process, for which adequate time needs to be provided to ensure a sustainable, long-term and beneficial outcome.

It has been noted that a number of parties who expressed an interest, did so with the specific intention of facilitating community participation in the process, rather than in participating in the forestry businesses on their own behalf. DWAF invites all parties who are willing to perform this community facilitation role to come forward to assist Government in this process. It must be stressed that if you are interested in performing this role you must declare any direct interest you may have in the commercial opportunities arising from the development of these areas. If you have a commercial interest we would advise you not to offer your services as a community facilitator, as this is likely to result in a conflict of interest.

If you are interested in performing, this community facilitation function we would request that you respond to DWAF by 26th April 2003. Inquiries should be directed to M. Dlomo at +27-12-336-7490 or fax +27-12-336-8392.

For additional information and details, contact:

Jeffrey L. Jackson
Johannesburg, South Africa
Tel: 27-11-325-4452
Email: jeffjac@global.co.za

Alan Bowser
Silver Spring, Md.
Tel: 1-301-608-3932
Email: asblaw@aol.com

 

Cape Town To Privatise Epping Market and Maitland Abattoir
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Cape Town has announced its intention to offer the Epping Market (fresh produce) and the Maitland Abattoir for sale to the private sector. These assets (businesses) are considered to be non-core to the City's activities. The property, however, will not be sold but provided to the successful bidder on a long-term leasehold basis.

A two-stage process is envisaged for both transactions:

Phase1: Pre-qualification

Interested parties must submit non-binding pre-qualifiaction bids. The information required will establish the bona fides of the prospective bidder, and will be used by the selection committee to compile a short-list of bidders. Prior to submitting this expression of interest, prospective bidders should attend the relevant briefing session(s) and site visit(s) on June 10, 2003 which will be held at the Civic Centre in Cape Town.

Phase 2: Binding Offer

Short-listed bidders who choose to submit a final bid, must submit a binding offer after completion of a due diligence, business analysis and valuation process. The successful bidder will be chosen after a 'structured adjudication process', the criteria of which will be made known in subsequent documentation.

It should be noted that the City of Cape Town, at its own discretion, may decide not to award the transaction at all and may eliminate the bid process at any stage.

Epping Market

The Epping Market is the fresh produce market servicing Cape Town and environs. This 31 hectare facility is located at the northwest side of the Epping Industrial Centre which is approximately 11 km from the Cape Town CBD. The site comprises office buildings, market halls, platforms, cold storage and ripening facilities and workshops. There is ample space for future expansion.

The business of Epping Market is carried on by an operating unit of the City. It is operated as an agency market, rather than as a wholesale market. The business is said to be profitable with significant visibility of its future cash flows and earnings.

Maitland Abattoir

The Maitland Abattoir has been operating since 1914. Currently, the facility is certified for both Halaal and Kosher production and has a capacity to slaughter 1,400 cattle daily.

The site comprises buildings and processing plant on a 13.5-hectare site. The infrastructure is said to require some upgrading in order to meet enhanced health and sanitation standards.

The deadline for submission of pre-qualification bids is June 23, 2003. Interested parties should contact PGi immediately for additional information on these transactions. There is a possibility of funding for technical assistance for SA-based historically disadvantaged firms. Contact J.L. Jackson (see below) for details.


Notice of Intention to Concession
Certain Tourism Assets inEastern Cape

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The Ukhahlamba District Municipality in the Eastern Cape Province has indicated its intention to place some of its tourist assets and facilities on a long-term concession contract for development and operational purposes. The two facilities proposed for concession are Aliwal Spa and Buffelspruit Game Reserve. These facilities are adjacent to each other and located in the Aliwal North area.

The Aliwal Spa comprises:

· Hot springs (2)
· Swimming Pools (3) and water slide
· Conference facilities
· Camp area (300 sites)
· Chalets (50) of which 47 are self-catering

The facilities are located at the border of the Eastern Cape and Free State provinces, and are in close proximity to the Orange River. The river access and connection to the Gariep dam provide opportunities for water sports and recreation.

The overall objective is to develop these facilities into an up-market tourist destination catering to local as well as foreign tourists.

Interested parties should make their interest known no later than July 10, 2003.

A full briefing session will be held on site on July 21 2003. RFP documentation will also be made available on July 21, 2003.


For additional information and details, contact:

Jeffrey L. Jackson
Johannesburg, South Africa
Tel: 27-11-325-4452
Email: jeffjac@global.co.za

Alan Bowser
Silver Spring, MD.
Tel: 1-301-608-3932
Email: asblaw@aol.com

John Guess
Houston, TX.
Tel: 1-713-995-7334
Email: jfguess@usa.net

 

National Ports Authority To Establish a Concession for a Ship Repair Facility
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The National Ports Authority of South Africa, which is a division of transport parastatal Transnet, has called for expressions of interest (EOI) for the establishment of a ship repair facility. This facility, to be established on a concession basis, will be located within the Cape Town Container Terminal adjacent to the Elliot Basin. The concession will be structured as a 'Build, Own, Operate, Transfer' basis (BOOT).

Companies which submit an EOI and who successfully pass an evaluation process will be placed on a shortlist and asked to submit a proposal in the second stage of the process.

Documents can be obtained at a cost of R1,140 (approximately US$ 150.00), which is non-refundable. Documentation is available from 25th August.

A briefing session will be held on 22nd September, 2003 in Cape Town. The proposal closes on 21st October.

There procurement policies of Transnet require 'Black Economic Empowerment' (BEE) in all of its procurement strategies. The BEE component of this transaction is expected to be on the order of 50%.

Revision: Change of Dates:


Briefing Session: 24 November, 2003

Proposal deadline: Jaunary 6, 2004

For other details of this transaction, please refer to the PGi archives.



For additional information and details, contact:


Jeffrey L. Jackson
Johannesburg, South Africa
Tel: 27-11-325-4452
Email: jeffjac@global.co.za

Alan Bowser
Silver Spring, MD.
Tel: 1-301-608-3932
Email: asblaw@aol.com

John Guess
Houston, TX.
Tel: 1-713-995-7334
Email: jfguess@usa.net

 

Housing Finance Units of Eskom and Transnet To Be Sold
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The Department of Public Enterprises of the Government of South Africa has called for Expressions of Interest (EOI) for the acquisition of 100% of the business of Eskom Finance Company (Pty) Ltd and Transnet Housing (a division of Transnet Limited).

Eskom Finance Company

The Eskom Finance Company (Pty) Ltd. (EFC) was formed in 1990 as a separate legal entity from Eskom, which is a wholly government-owned parastatal. EFC was established specifically to provide finance for the purchase of residential property by the employees of Eskom and its subsidiaries. EFC administers all housing-related activities on behalf of Eskom.

The mortgage loan portfolio is estimated to be R2.5 bn (approximately US$340 million). Payment is made by way of salary deduction. In addition to the mortgage loan portfolio, there is also an employee loan portfolio of R200 mn. (US$ 27 mn.).

Transnet Housing

Transnet Housing is a division of Transnet Limited, the transport-sector parastatal wholly-owned by the South African government. Transnet Housing provides a range of financial and credit services to Transnet employees, the most significant of which are home ownership assistance products (mortgage loans). Transnet Housing administers these programs as a fringe benefit. This benefit is also made available to employees of business units that have been sold.

The mortgage loan portfolio is approximately R3 bn. (approximately US$410 mn). The employee loan portfolio is on the order of R500 mn (US$ 68.5 mn).

The intention of government and the transaction advisors is to restrict this bid process to serious and well-funded companies and financial institutions. Hence, there is a non-refundable fee of R40,000, payable by guaranteed check, to obtain the tender documents.

Documents will be available from September 15, 2003.

The timetable and closing date are made available in the documentation.


Jeffrey L. Jackson
Johannesburg, South Africa
Tel: 27-11-325-4452
Email: jeffjac@global.co.za

Alan Bowser
Silver Spring, MD.
Tel: 1-301-608-3932
Email: asblaw@aol.com

John Guess
Houston, TX.
Tel: 1-713-995-7334
Email: jfguess@usa.net

 

NOTICE: CHANGE OF DATES AND DETAILS
FOR TRANSACTIONS
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1. Aliwal Spa and Buffelspruit Game Reserve

Bid documents for this transaction are available from 13th October to 30th October (only) for a fee of R2,500 (two thousand five hundred South African Rands - approximately US$ 355). Site visits can be arranged from November 1 - November 30 for those companies who have or plan to submit an expression of interest. An optional briefing session was held on-site on November 11th.

Final bids are due no later than February 2, 2004.

Refer to the website archive for information on this transaction.

 

2. Concession for a Ship repair Facility at Cape Town Harbor

The briefing session was held on November 24th, 2003 at the office of the National Port Authority (NPA) in Cape Town.

The new proposal deadline is January 6, 2004.

3. Roshcon

This transaction has been delayed for some time, and it is likely that the existing divestiture process will be cancelled and replaced with a new structure that will see a majority or complete sale of the asset. No new dates are available.


4. Blue Train

The concessioning of the Blue Train had been delayed indefinitely. One of the trains suffered a fire earlier this year and has since not been re-built or refurbished. The owner, Transnet, is now uncertain about the future status of this transaction.

For original announcements of these transactions, please visit the transaction archives at the website:
www.southafricaprivatization.com

 

City of Cape Town to Privatize the Athlone Power Station
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The City of Cape Town has announced its intention to invite bids for the transformation of the Athlone Power Station by entering into a public-private partnership or an agreement with an independent power producer.

The process of selecting the preferred bidder will be undertaken through a competitive bidding process. An executive summary of the RFP is available at the city's website: www.capetown.gov.za.

Background

The City of Cape Town (CT) owns and operates the Athlone Power Station which was formally commissioned in 1962 comprises six units with a nominal capacity of 30 MW each. Athlone was developed primarily for coping with the growth in demand for power at the time and to supplement the power supplied by the city's other station at Table Bay and power provided by national supplier Eskom. In 1973 the power supply situation was augmented when Eskom constructed two high voltage transmission lines to supply Cape Town.

Athlone is currently operated principally to minimise power purchases from Eskom by running it as a peaking station together with the Steenbras Power Station and two gas turbines. Athlone also provides a measure of emergency back-up in the event of national system failures.

Cape Town's advisors have estimated that without new investment, the station will have to be closed down within the next two years. This would result in a loss of employment, power security and flexibility, and would also negatively impact Cape Town's future options regarding supply and tariffs.

Between 1985 and 1994, Athlone was held on 'standby' pursuant to an agreement (Capacity Allocation Agreement) with Eskom. Studies conducted by Merz and McLellan in 1994, based on projected Eskom tariffs and other parameters, indicated that Athlone would be viable over a 25-year period and recommended resumption of operation. In January 1995 the Eskom agreement was phased out and full-time operation of Athlone was resumed.

It should be noted that Athlone is of dated design and is thus not of high efficiency. For these reasons the nominal power output of the station was reduced from 180 MW to 120 MW by decommissioning turbines 1 and 2, thus avoiding major capital expenditure. Repairs to the boiler plant are held to a level just adequate to serve the reduced capacity. In order to resume full operation at its design capacity, the plant will require significant upgrading.

Power Demand

The current maximum power demand in the Cape Town area is approximately 2,100 MW. Of this, Eskom provides 500 MW directly to consumers and the balance (1,600 MW) is supplied by the municipality's distribution system. Cape Town generates 358 MW of this amount, which is comprised of supplies from Athlone (120 MW), Steenbrass (160 MW) and gas turbines (78 MW).

It is estimated that power supply demand growth is 3% per annum. The anticipated restructuring of the electricity supply industry in South Africa (refer to Privatization Review newsletters) is likely to lead to increased competition on the supply side, while concurrent increase in demand will lead to a requirement for additional investment in this sector.

The transaction advisor appointed by the Cape Town municipal government has analysed various restructuring and sale options, and has recommended the IPP (independent power producer) option. Their studies indicate that a fully refurbished Athlone Power Station can be financially viable as an IPP under specific operating regimes and tariff assumptions.

The contemplated transaction is for the coal-fired stations only.

Solicitation documentation available for fee of R1,000 or the US$ equivalent.

A pre-bid meeting will be held in Cape Town on the 24th of February. Completed proposals are due on April 30th, 2004.


Local South African Firm seeks strategic equity partner for opportunity in the Soy Food Processing Industry

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A local firm has been shortlisted for the acquisition of Specialised Protein Products Pty Ltd., (SPP) a subsidiary of Denel. Denel is wholly-owned by the Government of South Africa, and specialises in military equipment. The firm has conducted a limited due diligence of SPP, and on the basis thereof recognizes the need to acquire a strategic investor or partner in the industry to turn around the company and add value to the existing asset base.

Background

SPP's principal asset is a 'unique' water-based extraction process for the conversion of soybeans into soy powder and derivative products. The process is said to be free of chemicals and superior in many respects to chemical extraction processes. The single plant has a production capacity of approximately 800 tons of primary industrial soy ingredients per month.

The production facility acquired HACCP and ISO 9001 Quality Assurance certification in 2002. Application for ISO 14001 Environmental Management System certification is pending.

A complete Information Memorandum with detailed historical and projected financials is available from the bidding company.

 

Notice of Intention to Concession
Certain Tourism Assets in Eastern Cape
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The Ukhahlamba District Municipality in the Eastern Cape Province has indicated its intention to place some of its tourist assets and facilities on a long-term concession contract for development and operational purposes. The two facilities proposed for concession are Aliwal Spa and Buffelspruit Game Reserve. These facilities are adjacent to each other and located in the Aliwal North area.

The Aliwal Spa comprises:

• Hot springs (2)
• Swimming Pools (3) and water slide
• Conference facilities
• Camp area (300 sites)
• Chalets (50) of which 47 are self-catering

The facilities are located at the border of the Eastern Cape and Free State provinces, and are in close proximity to the Orange River. The river access and connection to the Gariep dam provide opportunities for water sports and recreation.

The overall objective is to develop these facilities into an up-market tourist destination catering to local as well as foreign tourists.


Interested parties should make their interest known as soon as possible. The new deadline for submission of proposals is June 30, 2004. RFP documentation is available at a cost of R2,500 (approximately US$ 360.00)

 

Bitou Municipality (formerly Plettenberg Bay) to Sell Airport
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The Bitou Municipality (formerly Plettenberg Bay) is selling the airport. Plettenberg Bay is a coastal resort along the popular "Garden Route" of South Africa's western Cape region, one of the focal areas of the growing tourism industry. For more information on the area, refer to: www.plettenbergbay.co.za.

Specifications:

• 65 hectares in extent
• 1,220 m runway / tar (20 m in width)
• 35 hangars
• Avgas facilities for propeller & jet engines

The deadline for submission of expressions of interest was 1400 hours on Monday, 31st May, but has been extended. The cost of the documents is R20,000

 

NOTICE: CHANGE OF DATES AND DETAILS FOR TRANSACTIONS
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1. Aliwal Spa and Buffelspruit Game Reserve

Refer to the website archive for information on this transaction.

No acceptable bids were received for the sale assets. The transaction advisor, however, remains open to unsolicited proposals. PGi has obtained detailed information on this project, which can be provided upon request.

2. Concession for a Ship repair Facility at Cape Town Harbor

The briefing session was held on November 24th, 2003 at the office of the National Port Authority (NPA) in Cape Town, after which proposals were due on January 6, 2004 from which a short list was developed. Final bids are due at the end of August, 2004.

3. Roshcon

This transaction has been delayed for some time, and it is likely that the existing divestiture process will be cancelled and replaced with a new structure that will see a majority or complete sale of the asset. No new dates are available.

4. Blue Train

The concessioning of the Blue Train had been delayed indefinitely. One of the trains suffered a fire earlier this year and has since not been re-built or refurbished. The owner, Transnet, is now uncertain about the future status of this transaction.

5. Specialised Protein Products (SPP)

This business is a non-core business unit of Denel, the state-owned arms manufacturer. SPP is an unrelated, non-core business which manufactures soy powder from a water-based extraction process. It is likely that this business will be 're-packaged' and put back on the market in late 2004 or early 2005.

For original announcements of these transactions, please visit the transaction archives at the website:
www.southafricaprivatization.com

 

Denel Announces Sale of Voltco
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Denel, the state-owned manufacturer of defense related products, has announced its intention to dispose of Voltco, one of its business units. Voltco is a manufacturer of electrical components and accessories for the domestic market. Several years ago Voltco was thought to have a 30% market share, but this share is thought to have diminished with the entry of foreign companies into the market.

Voltco is a business unit of Eloptro, which is a wholly-owned unit of Denel. Eloptro is a manufacturer of optical devices, and is not a part of this sale. Voltco has not been ring-fenced and for technical purposes trades as part of Eloptro.

Voltco's current product line includes:

  • A range of multiplug extension cords
  • Cutout and cord switches
  • Autolights
  • Movement sensors
  • Powerpacks
  • A range of multiplug adapters
  • Dimmers, rocker switches and indicator lights
  • Lamp holders
  • Timers

The multiplug adapters and extension cords are the most popular products, and account for approximately 80% of sales. The company is said to have several new products under development.

Voltco has approximately 85 employees operating one shift. The premises are located in Kempton Park, in close proximity to Johannesburg. The production facility is approximately 2,200 sq. m. in extent, covering two stories of a free-standing building at the Eloptro facility. The equipment comprises stamping machines, machine tools, plastic injection moulding machines, tools and moulds.

Conditions of sale include:

  • The purchase should not be subject to any form of loan from Denel
  • The business is sold as a going concern and there is no guarantee of future profits.

The deadline for submitting expression of interest (EOI) is 12:00 noon, March 4, 2005. Expressions of Interest should be sent to: TenderResponse@Denel.co.za. Tender documents will be sent to interested parties

Department of Minerals and Energy Announces Solicitation for Peaking Power Generation
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The South African Department of Minerals and Energy (DME) has announced its intention to commence a pre-qualification process to identify suitable firms to qualify as bidders to build, own and operate ("BOO") peaking power generation facilities. The firm(s) would operate as "independent power producers" (IPP), which is a relatively new process in South Africa. In South Africa, power generation has been dominated by the state-owned power utility (Eskom), with some peak capacity owned by metropolitan councils.

The contemplated generation capacity will comprise two open-cycle gas turbine peaking power stations, with a combined output of approximately 1,000 MW. Only applicants who are successful will be invited to bid for one or both of the new projects, which are expected to be operational by the third quarter of 2008.

A non-mandatory bidders conference will be held on April 22 at the Gallagher Estate in Midrand, South Africa.

Any party which anticipates submitting a bid must notify the DME no later than 13th May 2005. The deadline for submission of applications is June 22, 2005.

Interested parties may download the request for qualification documents (RFQ) from the website:
www.dme.gov.za.


For additional information and details, contact:

Jeffrey L. Jackson
Johannesburg, South Africa
Tel: 27-11-325-4452
Email: jeffjac@global.co.za

Alan Bowser
Silver Spring, MD.
Tel: 1-301-608-3932
Email: asblaw@aol.com

John Guess
Houston, TX.
Tel: 1-281-443-7807
Email: jfguess@usa.net


Kroonstad Power Project Announced
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The Moqhaka Municipality (located in the Free State province) has announced its intention to seek proposals for an independent power producer (IPP) to transform the Kroonstad Power Station The firm(s) would operate as "independent power producers" (IPP), which is a relatively new process in South Africa, or through a public-private partnership (PPP). In South Africa, power generation has been dominated by the state-owned power utility (Eskom), with some peak capacity owned by metropolitan councils.

The Kroonstad power station has a licensed capacity of 30 Mwe (3 x 10 Mwe). It is a coal-fueled plant. Information provided in the latest report by the US Department of Energy indicates that the plant is "non operational," defined as "shut down or in stand-by mode."

Potential bidders are requested to address the following areas:

  • Refurbishment/upgrading of the power station
  • Future economic operation
  • Structure of a long-term power take-off agreement

RFP documentation is available from May 5, 2005 for ZAR 700 or the US$ equivalent (currently, approximately US$115). There will be a pre-bid conference on May 31, 2005 at the Municipal Offices in Kroonstad.

For additional information on the energy sector in South Africa, follow the links:

http://www.fossil.energy.gov/international/Africa/safrover.html

http://www.eia.doe.gov/emeu/cabs/safrica.html

See Appendix A for an "Energy Overview of South Africa and additional links for further data and related information.


For additional information and details, contact:

Jeffrey L. Jackson
Johannesburg, South Africa
Tel: 27-11-325-4452
Email: jeffjac@global.co.za

Alan Bowser
Silver Spring, MD.
Tel: 1-301-608-3932
Email: asblaw@aol.com

John Guess
Houston, TX.
Tel: 1-281-443-7807
Email: jfguess@usa.net

 

Potential Divestitures in South Africa 2006/07

The Government of South Africa (GoSA) has announced its desire and intent to shed a varied collection on non-core state-owned enterprises (SOE), most of which are subsidiaries or divisions of Denel, Eskom or Transnet. However, the GoSA has not been able to establish a timetable due to the requirement to reach accommodation with labour regarding the impact on employment and terms of service.

The list presented below includes all of the enterprises and divisions which have been proposed for divestiture or transfer. In the absence of detailed information about these enterprises, we have provided the limited information available from public sources, links and contact information for your use. While none of the entities is listed on the stock exchange, we have included average sector earnings yields (as of January 20, 2006) as a proxy indicator. The sectors correspond to the Johannesburg Stock Exchange All Share sector indices.

 
Denel

 

Eskom (i)

 

Transnet (ii)

 

Specialised Protein Projects (SPP)

Sector: Food Producers

Business: SPP specializes in the production of soy-based, human grade, protein rich foodstuffs

Status: Subsidiary of Denel (100%)

CEO: n/a

Reporting Ministry: DPE (through Denel)

Contact details:
Earnings Yield 6.9 (NB: this business is financially distressed)

Customer Base: National and international

Revenue: ZAR 5.4 mn. (31 July 2003)

Profit/(Loss): (ZAR 13.2 mn) 31 July 2003

Audited: No

Assets: ZAR 128.7 mn (31 July 2003)

Note:
It is speculated that an unsolicited offer has been made for SPP but confirmation and/or details are not available.

 

Arivia.kom

Sector: Software and Computer Services

Business: Arivia.kom provides IT solutions and services; their products include end-to-end IT infrastructure and business solutions, e-ventures solutions and niche solutions from national identification cards and voter registration systems to mobile pension payments and GIS related surveys.

Status: Its subsidiaries are Face technologies, Intersolve Health Informatics, Computer Foundation, Spartan Computer Rentals, and Csiper Consulting. Arivia.kom's holding company is Arivia.kom (Pty) Ltd trading as arivia.kom. Shareholders include Denel, Eskom and Transnet.

CEO: Zeth Malele

Reporting Ministry: Department of Public Enterprises

Contact Details:
Tel: (011) 233 0800

Fax: (011) 234 0261

E-mail: info@arivia.co.za
Website: www.arivia.co.za

Earnings Yield: 4.3

Turnover: ZAR 1.51 bn.

EBIT: ZAR 60.3 mn

Auditor: Deloitte & Touche; Sizwe Ntsaluba

Employees: 1,500

 

Autopax Passenger Services Pty Ltd.

Sector: Travel and Leisure

Business: Autopax Passenger Services Pty Ltd provides long distance passenger transport, Translux and City to City are the units of Autopax. Translux serves more than 100 destinations in southern Africa, including major cities in Zimbabwe , Malawi and Mozambique . City-to-City operates from Gauteng along the major highway corridors to provincial destinations. Transports about 4 million passengers per year.

Status: Subsidiary of Transnet Ltd.

CEO: MC Bester

Reporting Ministry: DPE (via Transnet)

Contact Details:
Tel: (012) 315 4300
Fax: (012) 315 4360
Website: www.translux.co.za

Earnings Yield: 6.2

Note:
Autopax has been on the market previously but the divestiture process was aborted.

 

Transtel

Sector: Fixed Line Telecommunications

Business: Telecommunications operator, its products and services include voice, data, wireless and radio, satellite, consultancy, transmission. Transtel owns an independent transmission infrastructure comprising cable, microwave radio, fiber optic links and satellite terminals. This network supports data communications, private telephone exchange junctions, trucked radio systems, train control and remote control

Status: Transtel is a division of Transnet Ltd. It is the largest full-service private telecommunications network operator in the Southern Hemisphere and is recognized by the International Telecommunications Union as an operator. Transtel is a shareholder in the newly licensed “second network operator” (SNO).

CEO: K.X Socikwa

Reporting Ministry: Department of Public Enterprises through Transnet

Contact Details:
Tel: (011) 359 1010

Fax: (011) 359 2611

Website: www.transtel.co.za

Earnings Yield: 10.1

Turnover: ZAR 830 mn (FY 2003)

Employees: 1,700

 

EON Solutions

Sector: Industrial Engineering

Business: Business and engineering consulting. Eon Solutions is a joint venture between BEE company Kutlwano Engineering and Eskom Enterprises (now re-absorbed into Eskom).

Status: n/a

CEO: Edwin Phala

Reporting Ministry: DPE (via Eskom)

Contact Details:
Tel: (011) 466 1178

Fax: (011) 466 1179
E-mail: Edwin@kec.co.za

Earnings Yield: 8.0

 

Roshcon (Pty) Ltd

Sector: Support Services

Business: Civil and electrical infrastructure; waste environmental and bulk handling; and material and waste remediation. Principal client is Eskom, although the firm does have clients in the southern African region.

Status: Subsidiary of Eskom (non-regulated)

CEO: n/a

Reporting Ministry: DPE (via Eskom)

Contact Details:
Tel: (011) 626 2843

Website: www.roshcon.co.za

Earnings Yield: 7.5

Turnover: ZAR 27.8 mn (June 2002)

EBIT ZAR 14.3 mn (June 2002)

Auditor: Deloitte & Touche

Assets: ZAR 143.2 mn.

 

Irenco (PTY) Ltd

Sector: Electronic and electrical equipment

Business: Irenco is a third-party manufacturer of electronic and plastic injection-moulding products as well as manufacturer of own product range of security products, dynamic weigh-in-motion systems, onboard computers and a vehicle monitor system.

Status: Subsidiary of Denel

CEO: n/a

Reporting Ministry: Department of Public Enterprises (via Denel)

Contact Details:
Tel: (012) 345 4212
E-mail: marketing@irenco.co.za
Website: www.irenco.co.za

Earnings Yield: 7.3

 

Virtual Care Pty Ltd.

Sector: Food & Drug Retail

Business: The Virtual Care Pharmacy Network has initially been established to supply medicine to members of the Transmed Medical Fund. There are a total of 58 pharmacies nationally. The department of health regulates the pharmacies trading as Virtual CarePharmacies.
Beside medicine distribution, most of the pharmacies have also embarked on providing a doctor consultation service at the pharmacies. Transmed members can hereby consult a doctor and obtain medicine at a flat fee.

Status: A division of Transnet Limited

CEO: Bongani Mlambo

Reporting Ministry: Department of Public Enterprises through Transnet

Contact Details:
Tel: (011) 308 2888/9

Fax: (011) 308 2858

E-mail: info@virtualcare.co.za

Earnings Yield: 5.8

 

Equity Aviation

Sector: Support Services

Business: Provides logistics services, aircraft, passenger and baggage handling at the six major airports in South Africa . Handles 20,000 aircraft movements per month

Status: Material Associate of Transnet Ltd.

CEO: Trevor Hyman

Reporting Ministry: DPE (via Transnet)

Contact Details:
www.equityaviation.co.za

Turnover: n/a

Earnings Yield: 7.5

 

Transnet Housing

Sector: General Financial

Business: Transnet Housing provides a range of financial and credit services to Transnet employees, the most significant of which are home ownership assistance products (mortgage and housing loans) and employee loans.

Status: Transnet Housing is a division of Transnet Ltd.

CEO: n/a

Reporting Ministry: DPE (via Transnet)

Contact Details:
Refer to Transnet ( www.transnet.co.za )

Valuation: n/a

Loan Book: ZAR 3 bn (mortgage loans); ZAR 500 mn (other credit extension)

Earnings Yield: 7.4

 

Freight Dynamics

Sector: Industrial Transportation

Business: Freight Dynamics is a major road transport company which provides long-haul freight within South Africa and the region; short-haul road transport; intermodal connections; and ancillary services such as warehousing, consolidation and insurance. The staff complement is some 1,800 people. Principal assets comprise 714 truck tractors and 2,439 trailers and containers.

Status: Division of Transnet

CEO: n/a

Reporting Ministry: DPE, consolidated within Transnet

Contact Information:
Tel: (011) 488-1210

www.transnet.co.za

Turnover: ZAR 650 mn.

Earnings Yield: 8.1


Additional information on these potential transactions will not be publicly available until each transaction is announced. If you require a more in-depth analysis on any of these companies, PGi LLC can be retained to prepare an in-depth report. Please contact any of the PGi principals listed below:

Jeffrey L. Jackson
Johannesburg , South Africa
Tel: 27-11-325-4452
Email: jeffjac@global.co.za

Alan Bowser
Silver Spring , MD.
Tel: 1-301-608-3932
Email: asblaw@aol.com

John Guess
Houston , TX .
Tel: 1-713-739-0803
Email: jfguess@usa.net


Eskom was converted from a statutory body into a public company, Eskom Holdings Limited, in July 2002 (in terms of the Eskom Conversion Act of 2001). Eskom Enterprises was created as Eskom's non-regulated component. It was responsible for all of Eskom's non-regulated business activities both within South Africa and beyond its borders. However, Eskom Enterprises has since been re-absorbed into Eskom Holdings.

The former Eskom Enterprises had an asset base of between ZAR 800 mn and 1.0 bn. This includes the IT and telecommunications businesses which respectively became part of arivia.kom (which was formed from the IT assets of Eskom, Transnet and Arial Denel) and Esitel (a merger with Transnet's assets).


Transnet's corporate structure, as described in the company's profile:

Divisions

  • Spoornet: rail freight and infrastructure
  • National Ports Authority: port infrastructure
  • SA Port Operations: manages terminal and cargo operations
  • Petronet: pipeline infrastructure for petroleum products
  • Freight Dynamics: road freight
  • Propnet: property portfolio
  • Metrorail: commuter rail infrastructure and operation
  • Transtel: telecommunications operator and part of new “SNO”
  • Transwerk: heavy engineering

Partially Owned

  • South African Airways (95%): to be transferred to Government

Wholly Owned

  • Autopax
  • B2B Africa Holdings (Pty) Ltd
  • Protekon (Pty) Ltd.
  • Viamax (Pty) Ltd
  • Freight Logistics International Inc.
  • SA Express Airways (Pty) Ltd

Material Associates

  • Equity Aviation (Pty) Ltd (49%)
  • Arivia.kom (32%)
  • V&A Holdings (Pty) Ltd (26%)

 

 

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