South Africa: AECI Stuck With Sans Fibre as Sale Deal Collapses

Tag : Nylon Yarn

AECI earlier this year announced what it said was an "in principle"agreement to sell the nylon light decitex (LDI) SANS to aconsortium made up of SANS management, the state-owned developmentfinancier, Industrial Development Corporation (IDC), and a SANSworkers' trust. The deal, announced in April this year, was subjectto several conditions, including detailed due diligence.
In its interim results in June, AECI said the transaction wasexpected to be concluded by the end of this month .
In a statement yesterday, AECI announced the termination of thenegotiations. It attributed the collapse of the deal to "a numberof major adverse developments in the nylon market that haveimpacted negatively on the value and prospects of the SANSbusiness".
SANS Fibres manufactures a range of specialty nylon yarns forhigh-specification end users. Its products are targeted at nichemarkets.
According to SANS Fibres MD Brad Page, the company is a globalleader in light decitex industrial fibre.
AECI said increases in raw materials and other input costs,customers' resistance to higher product prices required to offsetthese increases, and labour unrest in Bellville, Western Cape, alsomade the trading environment unfavourable. The group said thedifferent parties to the deal had agreed that because of suchcircumstances the transaction was no longer feasible.
AECI said it would re-evaluate several options and would make afinal decision on exiting the nylon business by the end of theyear.
Meanwhile, AECI said a due diligence for the sale of SANSpolyethylene terephthalate (PET) business was going ahead with theprospective buyers.
AECI exited nonperforming nylon, polyester heavy decitex industrial(HDI) and polyester light decitex industrial (LDI) yarn businessesat the end of last year.
According to the group, the polyester businesses had not beenprofitable "for some time", largely because of competition from theFar East.