JOHANNESBURG (Reuters) – South Africa’s second-biggest grocery group SPAR has sold its loss-making business in Poland to local Polish retailer Specjal for 185 million rand ($10 million), it said on Wednesday.
SPAR will be required to recapitalise the business at an estimated cost of 2.7 billion rand, the majority of which will be achieved by it settling the business’s funding debt, it said.
Shares in the group were down 6.79% at 117 rand by 1220 GMT.
SPAR, which has been reviewing its European operations, said the deal provides certainty for investors and removes the loss-making business from its balance sheet.
“For SPAR Poland to become earnings generative and value accretive to the group, significant time and investment would be required,” it said.
SPAR’s Polish assets comprise approximately 200 retail stores, three distribution centres and one production facility.
“This also gives clarity to our dedicated employees in Poland, who now have the potential to expand the business under the ownership of Specjal, a company with the requisite resources, scale, and capacity to take these assets to the next level,” SPAR Group CEO Angelo Swartz said.
SPAR operates in 11 countries, but its core South African business accounts for about 60% of group sales.
($1 = 17.9059 rand)
(Reporting by Sfundo Parakozov; Editing by Jan Harvey)
