Lonmin has entered an agreement to sell its 50% interest in Petrozim Line for a gross cash consideration of US$14,750,000 to the National Oil Infrastructure Company of Zimbabwe.
In addition, Lonmin will receive US$8 000 000 in the form of special dividends from Petrozim.
The transaction forms part of company’s ongoing programme to dispose of non-core assets.
The purchase price and special dividends will be paid in cash on completion of the Transaction and will be used to improve the company’s liquidity.
Petrozim, which is incorporated in Zimbabwe, owns and operates the Feruka to Harare fuel pipeline and currently holds the sole and exclusive right to transport all petroleum products imported into Zimbabwe through the pipeline.
Lonmin’s interest in Petrozim has been impaired to nil and no attributable profits were recorded in the company’s report and accounts for the year ended 30 September 2017.
The closing of the Transaction is subject to various conditions precedent including approvals from the Zimbabwean Competition Commission, Zimbabwe Revenue Authority, in addition to the consent of Lonmin’s lending banks.
Subject to fulfilment of the conditions precedent, the transaction is expected to complete in Q4 of FY2018.
The Standard Bank of South Africa has acted as financial adviser to Lonmin in relation to the transaction.