JOHANNESBURG - Delta EMD Limited specialises in the manufacture and supply of Electrolytic Manganese Dioxide (EMD), used in production of primary alkaline batteries.
The company has decided, subject to shareholder approval, to discontinue operations during 2014 and to realise value for the company’s assets during 2014 and 2015. The assets are situated in Nelspruit, Mpumalanga, Black Rock, Northern Cape, and Newcastle, Australia.
The company has considered a number of strategic options including the sale of the business, a change in strategy, and discontinuation. Efforts to sell the business have not been successful, however the company will consider any further interest, and the company’s several sites might be of interest to different purchasers. The investigation of alternative strategies also has not identified attractive investment opportunities. Given the declining state of the global EMD market, and Delta EMD’s deteriorating financial performance, the company has concluded that the discontinuance of the business in an orderly manner is the most prudent course of action.
Factors contributing to the decision include:-
- Global EMD capacity exceeding demand in a declining market, resulting in lower global EMD selling prices
- The continued imposition of anti-dumping duties on Delta EMD’s exports to certain geographies
- International battery producers preference for domestic supply
- The increasing cost of doing business
- Delta EMD’s limited competitive advantages
- A requirement for substantial capital expenditure to sustain Delta EMD’s operations
- A substantial North American customer’s recent decision to substantially reduce supply from Delta EMD, as announced by the company on 24 January 2014.
Shut down of EMD production, if approved by Delta EMD’s shareholders, will be done in a phased manner after production of adequate inventory to supply customers their committed volumes and to allow the orderly transition of their supply arrangements.
The orderly discontinuance of the business and sale of assets also will provide the company the resources necessary to decommission its sites in a responsible manner, to assist employees with outplacement, and to provide severance.
The company will provide shareholders a memorandum setting out in detail the rationale for the decision. The memorandum will be distributed to shareholders during April 2014 together with a notice of the company's Annual General Meeting, which is scheduled to be held during May 2014. The shareholders' vote to approve the decision will be proposed at the Annual General Meeting.
The company presently employs a total of 177 employees, of which 156 are employed at the Nelspruit facility and 21 are employed at the Black Rock facility.
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