Wood products manufacturer, Masonite, will soon be back on track thanks to a R300 million investment by its new owners – corporate investment and transactional advisory firm, Jacobs Capital, and its partners, Black Bird Capital (headed by Nkosinathi Nhlangulela and Siyabonga Mncube).

Durban-based Jacobs Capital and its partners acquired Masonite, one of South Africa’s largest manufacturers of high quality engineered wood and the chief employer of people from impoverished communities in Estcourt ,after the company was placed into business rescue in December last year.

Shareholders – including majority owner Masonite International – cited an explosion at the Estcourt Mill in June 2014 and a difficult trading environment as the reasons. This controversial decision ignited lively debate during the business rescue process with many stakeholders questioning whether the company was in the dire straits claimed by its US parent.

The business rescue process ended late last week with good news for a number of stakeholders. All jobs have been saved. Creditors received 100 cents in the rand and shareholders were paid a 35 % premium on the list price. Jacobs Capital has its foot firmly to the floor and says it is wasting no time when it comes to accelerating out of past difficulties.

“All the conditions of sale have been met. We have teams in place looking at all aspects of the business and strategic planning sessions have produced short and longer term plans,” said Wessel Jacobs, chief executive of Jacobs Capital. The technicalities of the transaction are that the partners – together known as the Millco Consortium – have purchased the just the Masonite Mill. The Masonite forestry assets have been sold to Forestco which is owned by R&B Timbers and an agreement is in place that secures the supply of timber for the mill.

Jacobs commented that Masonite is, in fact, a strong company and the deal that was rubbers tamped by the Competition Commission in June, was structured to ensure that all creditors were paid out leaving the company with a debt free balance sheet and working capital of R85 million as well as R100 million in stock holding.

“Extensive recapitalisation of the production lines is necessary to ensure that the mill runs at full capacity which will ensure that the company is able to return to sustainable profit as quickly as possible.  A new product line is also among plans to ensure that Masonite keeps up with market trends,” said Jacobs.

“We believe that the modernisation of the mill will prepare it for expansion into new markets and products. This will contribute towards Masonite business maintaining its position as aleading producer of hardboard and timber products,” he added.

Nkosinathi Nhlangulela, director and shareholder added: “The company is now 100 percent locally owned with a new board that understands local conditions and imperatives. We see this as a long term commitment to both the business and the KwaZulu-Natal region. The new leadership is well placed to ensure a sustainable, ‘built to last’ business approach. It combines local management experience and expertise and offers access to strategies, systems and methodologies that have proven successful in turning around a number of South African manufacturing businesses.”

Hilton Loring, Masonite Chief Executive, said the company was back on track. “The lead management team is in place with renewed energy and entrepreneurial spirit. This combined with investment and a new product line will ensure the company meets growing demand and provides Masonite products of the same high quality and standards that customers expect.

The acquisition of Masonite is the third large investment by Jacobs Capital in just 12 months. The recapitalized company is expected to make a meaningful contribution to the annual revenue of the company, whose investments already exceeds R1,5 billion. Since its establishment in 2002, Jacobs Capital has completed over 50 restructuring projects including the successful turnaround of Da Gama, one of the largest textile mills in South Africa.

Jacobs Capital was established in 2002 as a private investment company. Since then, it has developed from exclusively acquiring and establishing businesses, to incorporating independent divisions that provide an extensive range of business advisory services as well as manage turnarounds, mergers and acquisitions.

It portfolio includes leading work wear manufacturer MB Workwear, textile companies Da Gama and Gelvenor, automotive component supplier Connecto Fasteners.