Sembcorp receives court judgment validating its South African water asset divestments
A third party who unsuccessfully attempted to become a minority shareholder in one of the divested assets had earlier challenged the sale in country’s High Court
THE South African Supreme Court of Appeal ruled in an update to legal proceedings that Sembcorp Industries’ 2018 divestments of its South African water assets, which a third party contested in court, were valid.
On Tuesday (Dec 10), the group said that it had received an appeal judgment last Thursday affirming that the 2018 divestments of its South African municipal water assets for 718 million rand (S$70 million) were “valid and enforceable”.
In December 2018, the group had announced the sale of the 100 per cent stake in Sembcorp Utilities South Africa (SUSA) held by its wholly owned subsidiary Sembcorp Utilities (Netherlands) NV (SUNNV), as well as its 100 per cent effective stake in Sembcorp Silulumanzi to South African Water Works.
Although Sembcorp had obtained consent for the divestments from the Mbombela local municipality before completion of the sale, this consent was challenged in the South African High Court by a third party. The party had made an unsuccessful bid under the Broad-Based Black Economic Empowerment programme to become a minority shareholder in one of the divested assets, Sembcorp Silulumanzi.
In the event that the divestments had to be reversed following legal proceedings, parties to the deal would have needed to reapply for the consent of the Mbombela local municipality.
In November 2020, Sembcorp announced that it had entered into legal proceedings over the matter. While the group and its subsidiaries were not parties to the legal proceedings when they began in July 2019, Sembcorp later requested and gained court approval for SUNNV and SUSA to join the proceedings to protect its interests.
The judgement is final but may become the subject of an application for leave to appeal to the South African constitutional court, said Sembcorp.
It is not expected to have material impact on the group’s earnings per share and net tangible assets per share for the financial year ending Dec 31, 2024.
Shares of Sembcorp closed up 0.7 per cent S$0.04 at S$5.62 on Monday before the news.
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