Masonite gets R300m investment

Just after Masonite’s business rescue practitioner said the majority of its directors had stepped down, the company will be recapitalised.

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Johannesburg - Just after Masonite’s business rescue practitioner said the majority of its directors had stepped down, the company will be recapitalised.

On Friday, the practitioner said 7 directors had stepped down, leaving Hilton Loring as its sole director and now CEO. The practitioner also said its rescue process approved by creditors, had been substantially implemented.

In a statement issued on Monday, Jacobs Capital said it was making an investment of more than R300 million, and that a recapitalisation programme was also on the cards for the manufacturer of engineered wood.

The business rescue process – which started last year and officially ended this week – included the acquisition of the company by corporate investment and transactional advisory firm Jacobs Capital and its partners, Black Bird Capital (headed by Nkosinathi Nhlangulela and Siyabonga Mncube).

Read also: Masonite: Preferred bidder has been chosen

Creditors received a full payout and shareholders will be paid a 35 percent premium on the list price. Most importantly, all employment contracts were saved.

The board of directors is in the process of being reconstituted.

“We have wasted no time since the deal was approved by the Competition Commission in June. All the conditions of sale have been met. This is a very exciting time. We have teams in place looking at all aspects of the business and strategic planning sessions have produced short and longer term plans,” said Wessel Jacobs, CEO of Jacobs Capital.

Jacobs Capital’s purchase of the company marks the third large investment by the group in 12 months. Jacobs Capital says it is expected to make a meaningful contribution to the annual revenue of the company, which has investments already worth more than R1.5 billion.

Jacobs says the deal was structured to ensure that all creditors were paid out, leaving the company with a debt free balance sheet and working capital of R85 million as well as R100 million in stock holding.

“Extensive recapitalisation of the production lines is necessary to ensure that the mill runs at full capacity, which will ensure that the company is able to return to sustainable profit as quickly as possible. A new product line is also among plans to ensure that Masonite keeps up with market trends,” says Jacobs.

Masonite lodged an application to enter into voluntary business rescue on December 22 with the Companies and Intellectual Property Commission, and at the same time applied for trading of its shares on the JSE to be suspended.

The company’s application to enter a business rescue process followed it continuing to operate at a loss last year, which compounded an explosion at its Escourt mill in December 2014..

In terms of the ratified transaction, the Millco Consortium has purchased the Masonite Mill. The Masonite forestry assets have been sold to Forestco which is owned by R&B Timbers and an agreement is in place that secures the supply of timber for Masonite.

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