PHILIPPA LARKIN
JSE-listed, diversified chemicals company Omnia Holdings, which said yesterday that it had sold a majority stake in Umongo Petroleum for R1 billion, is now ’actively pursuing’ acquisitions in mining and agriculture to add to its war chest as well as considering a possible ’special dividend’ to shareholders or a share buyback at the end of the financial year.
Omnia and minority shareholder Autumn Storm Investment had negotiated the deal in a transaction, which will see Orkila South Africa (Orkila), a subsidiary of Azeli, a global service provider in the speciality chemical and food ingredients industry, secure a 90 percent share in Umongo.
Omnia, together with Autumn Storm, would retain a 10 percent shareholding, which was subject to a two-year option agreement.
Seelan Gobalsamy, the chief executive of Omnia, said: “This is a further step in the execution of our group’s strategy. We identified Umongo as non-core during our strategic review and while we had not actively marketed the business, we are pleased to have negotiated an attractive deal - one that is in the interest of all stakeholders.”
Omnia, which acquired 90 percent of Umongo in 2017 for R637 million, would be receiving total cash proceeds expected to be R1bn upon closing, followed by additional proceeds of between R86m and R105m if an option on the retained 9 percent shareholding was exercised, the firm said.
Gobalsamy said the proceeds from the transaction would further strengthen its capital position.
“It will provide additional optionality to create value for shareholders, either through capital allocation towards growth opportunities or by returning the cash to shareholders,” said Gobalsamy.
In an interview, he said that although a special dividend was paid in March to shareholders after the Umongo deal was concluded, the firm would consider a special dividend or share buyback at the end of the financial year.
An evaluation of Omnia’s balance sheet at its financial year-end in March 2022 would determine how the capital was allocated within its stated framework.
The Umongo deal comes after it sold non-core asset Oro Agri last year for R2.2bn to European agricultural company Rovensa.
Omnia, valued at R11bn, has come a long way on the path to fiscal stability after tackling massive debt and a tanking share price. By 2019, Omnia’s share price had dropped by more than 85 percent over the preceding five years. However, in the year to date its share price has leapt 43.57 percent. By midday yesterday, the share price was flat at R65.09, down 0.6 percent.
The group said it was driving its ‘reset and growth’ phase of its strategy and now actively pursuing value-adding organic and inorganic growth opportunities, investing in greener technologies and focusing on relevant geographic expansion with a view to enhance Omnia’s positive impact in the world.
“With this war chest we will clearly look at other opportunities,” said Gobalsamy.
Looking ahead, he said right now the company, with its focus on agriculture and mining, was in a busy season. Going forward, Omnia hoped to expand its business in Canadian and Indonesian mining as well as investing in agriculture in Australia.
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