Oceana to sell off cold storage business in R760m deal

Fishing group Oceana will be selling its commercial cold storage (CCS) business to a consortium of investors in a R760 million deal, a transaction that it says will “enable it to invest and expand its core fishing business”.

The consortium of buyers includes a subsidiary of Old Mutual Alternative Investments African Infrastructure Investment Managers (AIIM) , specialist food logistics company in mid- and East Africa Bauta Logistics and strategic investment and empowerment partner Mokobela Shakati, the group said in a Sens statement on Tuesday.

“CCS has six cold stores, five in South Africa and one in Namibia, of which three are owned and three are long-term leases. Total storage capacity is some 100 000 pallet spaces,” Oceana said.

According to Oceana, the transaction should come as no surprise to the market as the CCS business has been placed on the backburner, having not been prioritised by the group for expansive capital allocation for some time. 

“This deal is a win-win. The transaction offers good value for Oceana. It strengthens our balance sheet allowing us to focus on leveraging the scale and capabilities of our fishing and fish-processing operations. “It also gives CCS the access to capital it needs to remain competitive and grow,” CEO Neville Brink said. 

Read: Oceana sees performance recovery in H2

A troubled Oceana

The JSE-listed company, which owns well-known tinned fish brand Lucky Star, has in the last few years battled some troubles marked by external investigations by financial authorities, the precautionary suspension of its CFO Hajra Karrim and the resignation of CEO Imraan Soomra, to name a few. 

In May, the group announced the departure of external auditor PwC who resigned from the role, citing a worrying lack of communication between it and the Oceana board.

In February, the Financial Sector Conduct Authority (FSCA) launched an investigation into the group’s affairs into what the watchdog termed as possible publishing of “false, misleading or deceptive statements, promises and forecasts regarding the past or future performance of the company, or its securities.” 

Read: Oceana appoints Zafar Mahomed as CFO

Before the investigation, the group had experienced delays in releasing annual financial statements for the 2021 period.  

Oceana remains linked to CCS

Despite disposing of the business, Oceana said it will continue working with CCS as this forms part of transaction conditions. The group has entered into a three year service contract with CCS from the date of implementation where Oceana will have the option to renew should it be satisfied with CCS’s service levels.

According to the group, its imports – mainly the Lucky star fish business – represents between 15% to 20% of CCS’s revenue, while the rest emanates from third-party manufacturers, importers and exporters.

Oceana will also provide transitional services to CCS for a year following implementation. The group says it expects to conclude the sale by the end of February 2023, subject to regulatory approval.

Read: Now PwC resigns as Oceana’s external auditor

AIIM investment director Damilola Agbaje added that CCS will play a critical role in ensuring the regional expansion of the cold chain logistical infrastructure sector, which he believes is currently immature.

Read: Oceana CEO Imraan Soomra resigns with immediate effect

“The cold chain logistical infrastructure sector is underdeveloped, and in places non-existent, across sub-Saharan Africa and this investment diversifies AIIM’s current portfolio into a high growth and high impact area.”

“CCS’s technical expertise and operational track record provides a crucial platform for regional expansion and securing strategic customer relationships,” Agbaje said.

Read: Oceana confirms FSCA investigation