Blue Label exits Mexico JV in R188-million divestment
Blue Label Telecoms has sold its interest in Blue Label Mexico to its partner in the business, multinational bakery products company Grupo Bimbo, for US$11.5-million (R188-million).
“On 16 September 2020, an agreement was concluded whereby Blue Label Telecoms would dispose
of its 47.56% interest in Blue Label Mexico…,” the company said in a statement on the JSE’s stock exchange news service on Thursday.
Blue Label said the disposal is in line with its strategy to refocus its efforts on its South African distribution
businesses and to deleverage the business “to ensure a more robust and liquid balance sheet going forward”.
The transaction is expected to be effective on Monday, 21 September, pending two outstanding conditions precedent: the waiver by a minority shareholder in Blue Label Mexico of its pre-emptive rights and the payment by Blue Label Mexico to Blue Label’s employee secondee of his salary up to 21 September.
“The agreement contains representations and warranties in favour of Grupo Bimbo, which are standard for a transaction of this nature,” Blue Label said.
The proceeds from the disposal will be used to settle Blue Label’s total parent guarantee obligations of $3.25-million payable to RBL Bank on behalf of Oxigen Services India as well as $5.37-million as a part payment by The Prepaid Company to a special purpose vehicle (created for the acquisition of Blue Label’s stake in Cell C) against its remaining liquidity support obligations of $10-million.
In line with Mexican taxation legislation, taxation is payable on the proceeds of the disposal, Blue Label said. As a result, the balance of the proceeds received will be applied to pay these taxes “up to a maximum of such residue”.
The equity accounted loss after tax attributable to the investment in Blue Label Mexico for the year ended 31 May 2020 was R5.8-million.