Pioneer Corporation Africa Limited is seeking shareholder approval to acquire Unifreight Limited assets and liabilities that will increase the group’s authorised share capital.
The company will hold an extraordinary general meeting on August 4.
In a statement yesterday, group non-executive chairman Patrick Chingoka said the transaction will result in Pioneer acquiring trucks, trailers and other vehicles, office equipment, furniture, fittings, the Swift brand and information systems and technology relating to Unifreight.
Under the deal the total cost of trucks, trailers, other vehicles and equipment is $5 019 807.
Pioneer will pay $25 000 per month for a period of five years from January 2011 for the purchase of the Swift Brand and $711 000 over three years in equal monthly instalments commencing from January 1 2013 for the purchase of the information and operating systems relating to Unifreight.
“An offer was made to the directors of Unifreight as Pioneer believed that the company has a good branch network and, more importantly, a strong brand in Swift with a fleet of appropriate size and mix,” said Chingoka.
“The acquisition of the assets and liabilities of Unifreight will complete the range of services offered by Pioneer and allow the company to better service the needs of its highly competitive market. Pioneer also believes that Unifreight skills base will fit in well with the expanded group going forward.
“The purchase consideration will be settled as follows:
$4 119 807 of the acquisition price will be settled through the issue of 514 975 875 Pioneer shares at a price of $0,008 per share to Unifreight. The share issued will rank pari passu (with equal value) in all respects with existing Pioneer shares. Pioneer will also undertake to settle a medium-term bank loan of $900 000 which is secured on certain Unifreight trucks,” he said.
The group’s authorised share capital will increase to 1,4 billion shares from 600 000 000 after the acquisition and 514 975 875 shares will be created and issued to Unifreight.
Chingoka said the group’s subsidiary, Clan Transport Pvt Ltd, experienced challenges that required capital injection which it failed to get from the parent company and that resulted in the subsidiary losing its market share.
Clan Transport is in the business of cross-border bulk services and passenger operations which has been on a decline, but now the services are now on demand.
“The board decided to restructure Clan Transport and close down its consolidations services, but continue to operate the subsidiary as a truck hire service provider. The board in taking the decision to restructure Clan Transport did not envisage that Pioneer would exit the consolidations business outright,” he said.
Clan Transport failed to turn around its operations in the multicurrency system and it experienced losses of $828, 132 for 2009 and $451,369 in 2010,” the statement reads.