DURBAN – Blue Label Telecoms on Thursday sold its 47.56 percent stake in Blue Label Mexico to its co-shareholder Grupo Bimbo for $11.5 million (R188m) as it focuses on deleveraging.
The group said the disposal was in line with its strategy to refocus its efforts on its South African distribution businesses and to deleverage the business in order to ensure a more robust and liquid balance sheet going forward.
“The proceeds from the disposal of Blue Label Mexico will be applied to settle Blue Label’s total parent guarantee obligations of $3.25m, payable to RBL Bank on behalf of Oxigen Services India as well as $5.38m as a part payment by The Prepaid Company to SPV2 against its remaining liquidity support obligations of $10m,” the group said.
Blue Label Mexico is a multi-carrier for all networks and its business model is based on long-term agreements with sales and distribution channels, independent sales organisations, service providers and mobile network operators.
“Part of its strategy is to redeploy under performing devices and to retrofit mature devices to include financial services transaction capabilities in order to assist its business partners to become more competitive and productive,” the group said.
Blue Label Mexico’s product offerings include pinless recharge, direct top-up, bill payments, cash collections, card acquiring, digital food vouchers, SIM card distribution, debit and credit card acceptances and international money transfers.
Blue Label Telecoms expects the transaction to be effective on September 21, with the exception of two outstanding conditions, which are: the waiver by a minority shareholder in Blue Label Mexico of its pre-emptive rights and the payment by Blue Label Mexico to Blue Label’s employee secondee of his salary up to September 21.
Blue Label said the total proceeds would be receivable on the effective date.
In line with Mexican taxation legislation, taxation was payable on the proceeds of the disposal.
“Accordingly, the balance of the proceeds receivable will be applied to pay such taxes up to a maximum of such residue,” the group said.
Blue Label Mexico reported the value of the net assets comprising the equity accounted investment at R138m at the end of May.
Blue Label shares closed 0.93 percent lower at R3.20 on the JSE on Thursday.