15th Oct 2008 14:01
15th October 2008
LONRHO PLC
("Lonrho" or the "Company")
Lonrho withdraws from shipping to focus on core African businesses
Lonrho Plc (AIM: LONR), the conglomerate with a structured portfolio of African investments announces that it has resolved to withdraw from the African sea freight market in light of the current global economic slowdown and the credit crunch.
Lonrho owns a 66.7% equity stake in SA Independent Liners (Pty) Ltd (SAILs) a scheduled containerised shipping service that operates along the West African coast and between South Africa and Europe.
Following a strategic review of Lonrho's investment in SAILs and the funding required to complete the implementation of the SAILs business plan and reach profitability, the Lonrho Board concluded that, in the current world financial markets, and with cogniscence of a global economic slowdown affecting the shipping market, it was prudent to review its ongoing support for SAILs.
As a result of Lonrho's decision not to provide further funding to SAILs, the Board of SAILS, after calling for alternative support, unanimously concluded that SAILs should be placed into liquidation today.
A key driver for Lonrho withdrawing from further support of SAILs is to focus Lonrho on investments that demonstrate better risk/reward ratios in the current global economic climate and to reaffirm Lonrho's commitment to its core businesses and focus on African markets as opposed to global ones.
In the six months ended 31 March 2008, SAILS incurred a loss of £6.1m on turnover of £6.7m which reflected the substantial costs of developing new routes in the shipping industry.
As with all Lonrho subsidiary companies, SAILS was an arms length, stand alone, investment and has no cross guarantees from or exposure for other Lonrho companies or Lonrho Plc. The liquidation of SAIL's will not affect the growth of the Company's other businesses.
David Lenigas, Lonrho's Executive Chairman commented:
"Following our strategic review, I am pleased to confirm that all of Lonrho's other investments in Africa remain on track and on budget and that forecasts for the African market generally are for continued strong growth in our key sectors. As an emerging market with little commercial credit, the Sub-Saharan Africa market is well placed to continue its economic development."
"SAILs was the only company in the Lonrho portfolio that had a direct correlation with depressed world markets. It was also the only Lonrho company that had an ongoing requirement for funding and would have required in the region of US$ 15 million from Lonrho to fully deploy the agreed business model and become cash positive. Given a predicted downturn in global sea freight rates; the tightening world economy and the impact of the credit crunch it was prudent for the Lonrho Board to carry out a strategic review of its position in relation to its investment portfolio across Africa. The conclusion was that the current world market is not conducive to the roll out of a new African shipping line."
LONRHO ENQUIRIES
|
Lonrho Plc |
+44 (0)20 7016 5105 |
|
David Lenigas, Executive Chairman |
+44 (0)7881 825 378 |
|
Geoffrey White, Chief Executive Officer |
+44 (0)7717 307 308 |
|
Emma de Borchgrave, Executive Director |
+44 (0)7867 785 177 |
|
|
|
|
Pelham PR |
|
|
Charles Vivian |
+44 (0) 20 7743 6672 |
|
|
+44 (0) 7977 297903 |
|
James MacFarlane |
+44 (0) 20 7743 6375 |
|
|
+44 (0) 7841 672831 |
|
|
|
|
Collins Stewart Europe : NOMAD to Lonrho |
|
|
Hugh Field |
+44 (0) 20 7523 8350 |
NOTES TO EDITORS
About LONRHO:
Lonrho Plc is an expanding conglomerate that is rapidly growing a successful business throughout Africa. The Company's shares are traded on the London AIM stock exchange (LONR). Lonrho is strategically focused on the development of business opportunities in infrastructure, transportation, support services, hotels and natural resources. The Company has over 19,000 shareholders and substantial institutional backing to support its mandate to build a profitable business that plays a fundamental role in the development of the African economy.
Since 2006, the Company has invested in or acquired control of:
Hotel Cardoso - www.hotelcardoso.co.mz (retained)
Lonrho Mining - www.lonrhomining.com
Luba Freeport - www.lubafreeport.com
Fly540 - www.fly540.com
Swissta Holdings - www.swissta.com
SA Independent Liner Services - www.saliners.com
Bytes and Pieces www.bytespieces.com
Kwikbuild - www.e-kwikbuild.co.za
LonZim - www.lonzim.co.uk
Related Shares:
Lonrho