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METTLE AGREES TO BUY BRANDRILL SUBSIDIARY

Johannesburg – Struggling drill and blast contractor Brandrill said on Friday it was divesting from South Africa after black economic empowerment group Mettle agreed to buy its South African subsidiary in a cashless transaction. Australian Stock Exchange-listed Brandrill said Mettle intended to introduce further equity partners into Brandrill Torrex, the mining services contracting side of the business. This would recapitalise the business, improving both its liquidity and balance sheet.  A private equity group, Mettle is now a subsidiary of the JSE Securities Exchange-listed empowerment group Hoskens Consolidated Investments (HCI). Mettle was delisted from the JSE in June last year, as a result of a scheme of arrangement with HCI. Under the agreement, Mettle will loan Brandrill South Africa (BDSA) R1.5 million, to be used to acquire the equity and shareholder loans of the minority interests in the Brandrill Torrex.  Brandrill Torrex is 51 percent held by BDSA. At completion of the transaction Mettle will hold 100 percent of BDSA and Brandrill Torrex.  It will also assume all the liabilities of BDSA, including a Brandrill guarantee of a 2002 preference share issue to the Industrial Development Corporation worth about R55 million, due in February next year.  Brandrill will be released from other guarantees amounting to about R30 million. Mettle`s acquisition comes a year after Brandrill said it had sold the subsidiary to Intresco, an investment holding company for `a group of South African investors who already have interests in the South African mining industry`. This agreement was subject to the satisfaction of several conditions, including the approval of the competition tribunal and consent from Brandrill and BDSA creditors. Ken Perry, the managing director of Brandrill, said at the time that the sale agreement represented the second leg of Brandrill`s restructuring plan, following the successful completion of its $12.9 million capital raising in December 2002.  The company gave no reason for the termination of this agreement. Brandrill formed its joint venture with Torrex in 1998, when it ranked as; one of the biggest mining contractors in southern Africa, with an order book of R414 million and more than 1600 employees. Specialising in mechanised mine contracting to the local underground precious and base metal mining industry, the joint venture secured contracts worth R304 million in 1999. Its client list included Impala Platinum, Associated Manganese Mines and Lonplats. In 2000 it won a R200 million underground mine development contract at Anglo Platinum`s R1.3 billion Maandagshoek platinum mine near Steelport, Northern Province, Perry said that while Brandrill would not receive `the consideration from the sale of BDSA previously contemplated`, the directors believed the deal was in the best interests of the company The company expected to report a loss for the half-year to December 2003, due in part to the performance of the South African business.

Source: Business Report – Sherilee Bridge