Lonrho (AIM: LONR), the African conglomerate with a diverse portfolio of investments ranging from infrastructure, transportation, support services and natural resources, announces that it has acquired a 45% stake in SA Independent Liner Services (PTY) LTD (“SAILS”) for a total sum of US$6.0m. Lonrho also has an option to acquire a further 6% stake in the company from existing shareholders over the next 5 years.
The SAILS Operations
SAILS is a ship operator and shipping line currently based in Cape Town, which focuses on shipping freight from South Africa to West Africa, Belgium, Germany, Holland and the UK. SAILS concentrates on containerised shipping and works closely with four strategic South African industries; motor manufacturing, chemicals, mining and agriculture. Each of these industries are large water-based transport users.
Current clients include world leading companies focusing on chemical manufacturing, food retailing, and transportation, Some of SAILS’s larger clients are:
- Sasol
- Tesco
- ZIM Line
The SAILS fleet
The SAILS fleet currently operate two sister ships, namely the 8,300 tonne MV Berta and 8,300 tonne MV Emilia. Both vessels have a carrying capacity of 650 twenty foot containers (TEU) and onboard cranes suitable for small ports. Lonrho’s investment will be used to expand the fleet to five vessels over the next nine months.
SAILS has been operating since March 2006 and has already secured US$20 million worth of shipping contracts for the next twelve months for its two existing vessels. The additional vessels scheduled to join the fleet over the coming months will allow SAILS to add additional contracts and customers to next year’s order book.
The SAILS shipping routes
The focus is to provide a regular, reliable scheduled service to West Africa, and Europe calling at – Durban, Port Elizabeth, Cape Town, Tema; Lagos, Rotterdam, Felixstowe, Bremerhaven and Antwerp. In the medium term SAILS is constantly monitoring and assessing alternative trade routes, including potentially East Africa, looking to expand rapidly to support the needs of its already strong client base.
South Africa has no commercially navigable rivers, but, capitalising on the country's two-ocean frontage, ocean shipping has long been a feature of its transportation network. Approximately 98% of the country’s exports are conveyed by sea. Containerised freight movements into and out of South Africa have been growing at more than 6% per annum for the past 10 years. The average annual growth rate from 2003 to 2006 was 12%. With West African connections developing steadily and with the World Cup Football being hosted in South Africa in 2010, volumes are set to increase on a consistent basis. Container shipping remains the most efficient, viable and eco-friendly mode of transport for international freight shipments.
Ian Wicks will continue as the Managing Director of SAILS. Ian has 30 years experience in the freight shipping and logistics industries.
This deal builds on and strengthens Lonrho’s interest in transport in Africa and taps into an industry that will benefit greatly from increasing trade between Africa and the rest of the world.
David Lenigas, Lonrho's Executive Chairman and Chief Executive, commented:
“We are delighted to announce this subscription for a substantial interest in SAILS. The company’s operations connect Europe to Africa providing the opportunity to strengthen trade connections between the two continents. The company has an experienced management team and a blue chip client base and we are excited at the future growth prospects of the company. Amongst others, the ZIM Line contracts (the world’s 10th largest shipping line), demonstrates the confidence that the market has in the future of SAILS”.
“SAILS joins Fly 540, Norse Air and Lonrho Air, as part of Lonrho’s transportation division and this acquisition is another example of Lonrho’s strategy of supporting African infrastructure. We believe that by investing in transportation and related companies, international and national trade will grow, living standards will improve, and a substantial difference will be made in Africa.”
Ian Wicks, SAILS Managing Director, commented:
“The subscription by Lonhro signals a new chapter in the development of SAILS. This is an age old industry and the links and support that SAILS has developed in its first year of operation will definitely grow and expand in the next two to three years. As a regular independent operator we have already made huge strides towards achieving our goals.” 10 July 2007
Enquiries: For further information, please contact:
- Lonrho Africa Plc +44 (0) 20 7016 5105
- David Lenigas, Chief Executive +44 (0)7881 825 378
- Emma Priestley, Executive Director +44 (0)7867 785 177
- Pelham PR Charles Vivian +44 (0) 20 7743 6672, +44 (0) 7977 297 903
- Candice Sgroi +44 (0) 20 7743 6376, +44 (0) 7894 462 114
Notes to Editors:
About SAILS
SAILS is a young South Africa based container shipping line, offering a viable alternative service to Exporters and Importers on the Europe, West African and South African trade routes. In an industry dominated by major players SAILS has shown how attention to clients needs creates a platform for success. SAILS is strategic to the infrastructural development of the African continent, currently serviced only by global shipping lines, whose priorities are on other trade routes.
About Lonrho:
Lonrho Plc is an expanding conglomerate that is rapidly growing a successful business throughout Africa. The Company is listed on the London AIM stock exchange (LONR). Lonrho is strategically focused on the development of business opportunities in infrastructure, transportation, support services and natural resources. The Company has over 20,000 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)
- Nare Diamonds - www.narediamonds.com
- Brinkley Mining - www.brinkley-mining.com
- Luba Freeport - www.lubafreeport.com
- Fly540 - www.fly540.com
- Norse Air - www.norseair.co.za
- Swissta Holdings - www.swissta.com
- Countermine plc - www.countermine.com
