Capital Equipment News November 2016

Following the approval of the deal between Eqstra and enX, Eqstra’s contract mining division will be recapitalised with a cash injection of R1,4 billion.

MINING GIANT REAWAKENS Following the conclusion of the deal between Eqstra Holdings and enX, Eqstra is set to undergo a radical change that will position it for long-term sustainability. Part of the deal will see a massive cash injection to recapitalise the MCC Contract Mining division, which has been in a challenging space through its exposure to the beleaguered mining sector, writes Munesu Shoko.

million, in a year which he terms “eventful and challenging”. While the Industrial Equipment and Fleet Management and Logistics divisions recorded profits of R94 million and R141 million, respectively, the Contract Mining division saw a loss of R463 million, due to several reasons. “The current year’s results were impacted by leasing asset impairments of R1 498 million. As at June 30, 2016, the division had R809 million worth of excess assets,” Serfontein tells Capital Equipment News. Eqstra is also in the process of closing or selling other non‑core operations as part of its strategy to refocus the group. This includes the excess assets in the Contract Mining and Plant Rental business units deemed unlikely to deliver desired return over the short term. These assets were previously valued as part of leasing assets. Serfontein says the plant rental component of the division was not delivering the required returns in the current market conditions and a decision was made to close it. This part of the business has since ceased operations effective October 1, 2016. “The division has discontinued its plant rental operations. Related asset impairments of R200 million were raised during the year,” says Serfontein. Meanwhile, following the end of MCC’s

A R463 million loss for Eqstra Holdings’ MCC Contract Mining division in the recently ended financial year is a clear testament of the trying times in the mining industry. But, following the approval of the enX transaction by both shareholders and competition authorities, Eqstra is set for a holistic transformation of its business. The R7,8 billion deal, first made public on 30 June 2016, has been finally sealed following shareholder approval for enX to purchase Eqstra’s Industrial Equipment and Fleet Management and Logistics divisions. The deal will also usher in a new lease on life for Eqstra’s MCC Contract Mining business, a division that is under

immense pressure with its exposure to the burdened mining sector feeling the wrath of the current downward global commodity prices and few-and-far-between mining contracts. As part of the transaction, the MCC Contract Mining division, the only division remaining in the Eqstra Holdings stable, will be recapitalised with a cash injection of R1,4 billion. This will also see Eqstra being rebranded as eXtract Group Limited, and will be steered by a new board of directors to take charge with effect from November 1 this year. Challenging business environment Jannie Serfontein, CEO of Eqstra Holdings, alludes to the fact that it has been a tough time in the recent financial year where the group recorded a loss of R2 253

CAPITAL EQUIPMENT NEWS NOVEMBER 2016 28