JSE-listed industrial energy group enX will acquire two of JSE-listed industrial and capital equipment group Eqstra’s divisions and recapitalise Eqstra’s contract mining division in a R7.8-billion deal.

enX will issue 52.7-million of its shares (consideration shares), at R21 apiece, to Eqstra for the acquisition of its Industrial Equipment (IE) and Fleet Management and Logistics (FML) divisions. It will also raise R1.5-billion, of which R1.4-billion will be used to recapitalise Eqstra’s Contract Mining and Plant Rental (CMPR) division.

Under the terms of the transaction, enX will assume R5.2-billion of Eqstra’s reprofiled bank and noteholder debt, while Eqstra shareholders will receive 0.13 enX shares for every Eqstra share held, as well as retain a share in Eqstra’s contract mining business.

Once the transaction is completed, which is currently expected to occur in the fourth quarter of this year, enX’s businesses will be divided into three clusters – industrial equipment, comprising Eqstra’s IE division and enX’s power and wood businesses; fleet management, comprising Eqstra’s FML division; and fuel and chemicals, comprising enX’s oil lubricants business and the chemicals distribution business of soon-to-be- acquired West Africa International.

The contract mining division will have a new capital structure and remain a standalone public company, with the R1.4-billion capital injection to be used to repay current bank debt.

Eqstra will unbundle the consideration shares to its shareholders.

enX CEO Paul Mansour will take up the position of enX deputy chairperson and Eqstra CEO Jannie Serfontein will assume the role of enX CEO once the deal is completed.

“Our vision is to build the next industrial powerhouse. This transaction with Eqstra represents an opportunity to take a significant step towards achieving this goal. We also have the prospect of building a dedicated and focused mining services business.

“We are also confident that this transaction addresses the interests of shareholders and provides a well-grounded opportunity to participate in a new-look company whose prospects are strengthened,” Mansour says in a recent statement.

Serfontein adds that Eqstra’s board believes the transaction will deal with the challenges faced by Eqstra in the “most constructive way possible”.

“It provides a material uplift for Eqstra shareholders, allows them to retain exposure to the industrial equipment and fleet management businesses, creates a sustainable capital structure and retains a share in the contract mining division,” he notes.