UGANDA, Kampala | Real Muloodi News | Bamburi Cement anticipates an extra payout beyond the initial $84 million consideration from the sale of a 70% stake in Uganda’s Hima Cement.
This additional payment, termed an Earn-Out Amount, hinges on Hima’s financial performance post-transaction, specifically if its earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the 2023 financial year equal or exceed USh3.13 billion.
The specifics of calculating EBITDA and determining the Earn-Out Amount are outlined in the yet-to-be-publicised share purchase agreement.
Bamburi, alongside Cementia Holding AG, is divesting its entire ownership in Hima to a consortium led by Sarrai Group and Rwimi Holdings for $120 million. Bamburi claims a 70% share of the proceeds, with Cementia receiving the remaining 30%.
In addition to the consideration, the purchasers commit to pay the Earn-Out Amount if Hima’s consolidated EBITDA for 2023 matches or surpasses USh77.96 billion.
Bamburi, in its circular to shareholders, notes that the Earn-Out Amount will be disbursed upon Himcem and Cementia furnishing the purchasers with their EBITDA calculation.
The Earn-Out option is commonly employed in asset sales to bridge the valuation gap between seller demands and buyer willingness.
Bamburi’s consideration is subject to adjustments related to Hima’s debt, cash holdings, and working capital levels.
The amount will be adjusted for Hima’s debt at the completion time and added to any existing cash held by the subsidiary.
Furthermore, Bamburi will retain Hima’s working capital exceeding USh48 billion. If Hima’s working capital falls below this threshold, the variance will be subtracted from the consideration.
Bamburi has informed shareholders of its intention to pay a special dividend from the sale proceeds, indicating that any extra consideration under the special terms could directly enhance returns for its shareholders.
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