The war between Russia and Ukraine has scuppered the much-touted deal that would have seen the Industrial Development Corporation (IDC) sell off a chunk of its stake in South Africa’s leading supplier of granular fertiliser.
The IDC’s CEO said in September last year that the entity was in advanced negotiations to sell some of its shares in Foskor after receiving a cash-backed
offer from an offshore investor.
However, the entity said the war between the two east European countries saw the potential deal fall through.
Tshepo Ramodibe, IDC’s head of corporate affairs, said: “The cash-backed offer in question did not materialise due to changes in the operating environment, mainly caused by the conflict between Russia and Ukraine, which has impacted the agricultural sector.”
The IDC invited potential buyers in October 2020 to submit expressions of interest for the company. The IDC owns 59% of Foskor’s ordinary shares. It is not looking to sell all its stake in the company.
Foskor has faced operational and financial challenges for several years.
“It is worth noting though that there has been a remarkable improvement in Foskor’s performance. The fertiliser and phosphate producer achieved positive earnings before interest, taxes, depreciation, and amortisation and turned its operating loss of R1.65-billion in 2020/21 to an operating profit of R120-million in 2021/22,” Ramodibe said.
The IDC this week released a mixed bag of results for the year ended March 2022. The development financier approved funding of R16-billion in an economy that was substantially depressed due to the Covid -19 pandemic and its lingering impact.
This figure represents a 146% increase from the R6.5-billion in the previous corresponding period. IDC disbursed R7.2-billion from its balance sheet, a 14% increase compared to last year. An additional R1.2-billion was disbursed from funds managed on behalf of other partners.
The development funder had grown its capital base to R109.7-billion, which is a 32.5% increase compared to the previous reporting period.
“We remain fully aware of the investment risks created by a challenging environment. We have also amplified our post-investment and client support programmes just so we can optimise the value of our un-listed book,” said IDC CFO Isaac Malevu.
The group failed to meet its target to rein in non-performing loans, which came in at 31.2%, against a base target of 21.9%.
Despite missing its own target, the value of non-performing loans decreased from R18.8-billion in 2020/21 to R12.8-billion in 2021/22. The IDC in its financial results said the two biggest non-performing loan exposures account for 50% of the total.
“These two clients are continuously monitored and managed while permanent, structured solutions are sought.”
The entity, however, played its cards close to the chest as to the names of the two companies, with Ramodibe simply saying: “One is a local mining company, while the other one is a tourism entity based in East Africa.”
The IDC also missed its impairment ratio target, which came in at 36.1% against a target of 32.6%.
“As of the end of 31 March 2022, our impairments provision was R20.8-billion, which remained flat when compared to the prior year’s provision of R20.7-billion.
“We are pleased that the strategies implemented in the last 18 months to reduce our level of impairments are starting to bear fruit,” Ramodibe said.
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