Metair saves well-known auto retailer with R290 million 

Metair announced today that it entered into a deal to acquire the struggling automotive parts retailer and wholesaler AutoZone, which is currently in business rescue.

The company informed shareholders via SENS today that it will acquire the entire issued share capital of AutoZone from AutoZone shareholders.

Metair will also be advancing a facility to AutoZone to settle its creditor claims and fund certain working capital requirements in accordance with its business rescue plan.

AutoZone is the largest privately owned automotive parts retailer and wholesaler in Southern Africa with a presence in South Africa, Namibia, Swaziland, and Botswana

The company is a leading distributor of auto parts, spares and car accessories in South Africa, with approximately 169 retail stores and 7 QSV stores.

AutoZone entered business rescue proceedings in July this year after landing in financial trouble.

The company published a notice on 5 July 2024 that its board of directors adopted a resolution on 1 July 2024 to voluntarily commence business rescue proceedings.

As of 1 July 2024, the value of AutoZone’s net assets – excluding liabilities that are subject to the Business Rescue Plan – was approximately R485 million. 

For the financial year preceding business rescue proceedings up until 30 June 2024, AutoZone generated a positive EBITDA of approximately R62 million and a net loss of around R61 million.

In its announcement, Metair noted that a key driver of AutoZone’s historical trading performance has been the impact of the significant debt on its balance sheet, predominantly related to the 2014 leveraged buyout of the business. 

“This funding structure impacted AutoZone’s ability to invest in working capital sustainably, ultimately impacting historical profitability,” Metair said.

“All of AutoZone’s historical debt will be settled following implementation of the Business Rescue Plan.”

“Metair is of the view that following the restructuring of AutoZone in terms of the Business Rescue Plan and investment in working capital, the business can return to profitability and be value accretive for Metair.”

In terms of the agreement, the maximum amount Metair would pay is R290 million. This consists of the following:

• A nominal amount for the acquisition of the sale shares
• An aggregate loan facility of up to R290 million

In addition, the company said AutoZone will need to use this money to pay R200 million to ABSA to settle the bank’s secured claim.

AutoZone must spend R15 million to settle pre-commencement unsecured creditors and R75 million to fund its working capital requirements and operate as normal.

However, Metair added that if AutoZone’s actual net working capital at the closing date is less than R344 million, Metair has the right to terminate the agreement.