The un-ending tale of Grand Parade’s disposal of Burger King

SOUTH AFRICA – Grand Parade Investments (GPI), the master franchise holder for Burger King in South Africa is urgently negotiating the sale of Burger King SA after Covid-19 devalued it by about R100m (US$6.8m).

This follows after GPI has encountered another snag in its almost year-long effort to dispose of the food service business.

The Cape Town-based investment holding company, which has minority stakes in Sunwest International casino and restaurant chain Spur, said in a Sens statement that the offer it had received to offload majority shares it holds in Burger King SA had expired.

GPI said a formal extension of the offer is being considered as it is “urgently negotiating” the sale and purchase agreement.

“Shareholders will be updated as to the progress of such negotiations in due course,” GPI said in the statement.

GPI entered into talks on February 18 2020 to sell its 95.36% stake in Burger King SA and the 100% it holds in Grand Foods Meat Plant to private equity outfit Emerging Capital Partners (ECP) Africa Fund IV.

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The deal was initially meant to be concluded by June 30, but on July 29 GPI announced that the terms of the sale had been renegotiated after Covid-19 wiped off about R100m (US$6.8m) of Burger King SA’s value.

The renegotiated terms assigned an enterprise value of R570m to the franchise, down from R670m (US$45.9m) when talks were first announced in February and lower than the R700m that GPI initially paid.

The Grand Foods Meat Plant that is accompanying the sale of Burger King SA was valued at R27m (US$1.85m) in February but was estimated to be worth R23m (US$1.57m) by end-July.

The renegotiated transaction was scheduled for conclusion by November 30 or “such later date agreed between the parties”, according to a July 29 Sens announcement by GPI.

Meanwhile, Grindrod subsidiary Grindrod Trading Holdings (GTH) has agreed to sell its entire stake in agricultural group Senwes to Agribel Holdings for R385.17m (US$26m).

The subsidiary of the listed freight services and shipping group, which first acquired a 20.3% stake in Senwes in 2013 in a deal worth R444m (US$3m), said the rationale for the sale was to dispose of certain noncore businesses with the proceeds being used to pay down debt. 

Agribel is the investment holding company of Senwes, one of SA’s largest agri-businesses and among the biggest providers of white maize worldwide.

The 111-year old Senwes has business units in the North West, the Free State, Gauteng, Mpumalanga, KwaZulu-Natal as well as the Eastern, Northern and Western Cape provinces. Both Agribel and Senwes have been listed on alternate exchange ZAR X since February 20 2017.

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