It’s the start of a new era at the Masonite mill as the new owners set out to modernise production and expand into new markets…
A recapitalisation programme and an investment of over R300 million are poised to breathe new life into the Masonite board mill in Estcourt, which has recently changed hands following a business rescue process.
The business rescue – which started last year and officially ended in mid-August – included the acquisition of the mill by corporate investment and transactional advisory firm Jacobs Capital and its partners, Black Bird Capital, headed up by Nkosinathi Nhlangulela and Siyabonga Mncube.
Jacobs Capital has a 49% share in the mill, while Black Bird Capital owns 51%.
Creditors received 100 cents in the rand and shareholders will be paid a 35% premium on the list price. Most importantly, all employment contracts at the mill have been transferred to the new company.
The previous directors have resigned, except for Masonite Africa CEO Hilton Loring, who remains on the board and is driving the repositioning and re-engineering of Masonite. A new board 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, chief executive of Jacobs Capital.
The addition of the Masonite business to the Jacobs Capital portfolio marks the third largest investment by the group in 12 months, and it is expected to make a meaningful contribution to the annual revenue of the company, whose investments exceed R1,5 billion.
Since its establishment in 2002, Jacobs Capital has completed over 50 restructuring projects including the successful turnaround of Da Gama, one of the largest textile mills in South Africa.
Jacobs said Masonite is a strong company and 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,” said Jacobs.
“We believe that the modernisation of the mill will prepare it for expansion into new markets and products. This will contribute towards Masonite business maintaining its position as a leading producer of hardboard and timber products,” he added.
Nkosinathi Nhlangulela, director and shareholder, added: “The company is now 100 percent locally owned with a new board that understands local conditions and imperatives. We see this as a long-term commitment to both the business and the KwaZulu-Natal region. The new Millco leadership team is well placed to ensure a sustainable, ‘built to last’ business approach. It combines local management experience and expertise and offers access to strategies, systems and methodologies that have proven successful in turning around a number of South African manufacturing businesses.”
An upbeat Hilton Loring, Masonite Chief Executive, said the company was back on track. “The lead management team is in place with renewed energy and entrepreneurial spirit. This combined with investment and a new product line will ensure the company meets growing demand and provides Masonite products of the same high quality and standards that customers expect.”
The ‘Masonite’ brand name will be retained until a new brand is developed. It is expected that this will be unveiled in 2017.
The Masonite forestry assets have been sold to Forestco which is owned by R&B Timbers. An agreement is in place between Masonite and Forestco that secures the supply of timber for the mill.
The mill, which produces hardboard, soft board and door panels, was damaged in an explosion in June 2014. This, together with a difficult trading environment, saw the company apply for business rescue in December last year.
Because Masonite has been in business rescue, its trading on the JSE has been suspended. Details of the listing on the Johannesburg Stock Exchange are still to be finalised.