| Mon 2 Apr 2007, 11:59 | | YRK - York - Acquisition and Renewal of Cautionary |
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YRK
YRK
YRK - York - Acquisition and Renewal of Cautionary Announcement
The York Timber Organisation Limited
(Registration number 1916/004890/06)
Share code: YRK
ISIN: ZAE000008108
("York" or "the Company")
ACQUISITION OF 100% OF GLOBAL FOREST PRODUCTS (PROPRIETARY) LIMITED AND SOUTH
AFRICAN PLYWOOD (PROPRIETARY) LIMITED AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
The board of directors of York refers shareholders ("York Shareholders") to its
announcement dated 28 February 2007 and is pleased to announce that York`s bid
has been accepted for the acquisition of 100% of the shares in and claims
against both Global Forest Products (Proprietary) Limited ("GFP") and South
African Plywood (Proprietary) Limited ("Plywood") (collectively, "Global
Forests") ("the Acquisition").
2. Overview of Global Forests
Global Forests is an environmentally sustainable, integrated forestry company,
headquartered in Sabie, managing 56,805 hectares of certified plantation
forests. Global Forests has 29,101 hectares of land reserved for conservation,
streams, natural heritage sites, roads and access routes.
Global Forests also owns and operates three sawmills and a plywood plant.
Currently, Global Forests is a supplier of solid wood products to the South
African market and actively exports to 5 other countries.
3. Terms of the Acquisition
York will acquire the shares in and claims against GFP from African Consumer
Products Investments Limited, GFP Partners Limited, Global Forest Products
Holding Company (Proprietary) Limited and the Industrial Development Corporation
of South Africa Limited ("the IDC") and the shares in and claims against
Plywood from GFP Partners Limited, GEEMF II Africa Investment Limited
(collectively, "the Sellers") and the IDC, in one indivisible transaction for
R1,694,747,439 ("the Purchase Consideration"), subject to the fulfilment of the
suspensive conditions set out in paragraph 5 below. The effective date of the
Acquisition is 30 June 2007. York was unable to acquire the assets of GFP and
Plywood directly.
The IDC holds an effective 30% interest in Global Forests ("the IDC Interest").
The IDC and York have signed a definitive agreement in terms of which the
purchase price for the IDC Interest will be discharged via the issue of ordinary
shares in the capital of York ("the York Shares") through a subscription by the
IDC at a value to be announced in due course, provided that the IDC shall not
acquire more than 34,9% of the enlarged issued share capital of York after the
issue to the IDC. Approximately R150m of the IDC Interest is specifically
earmarked to enhance the broad based BEE and staff participation in the enlarged
York group ("the BEE and Staff Transaction"). The specific purpose of the BEE
and Staff Transaction will be the upliftment of communities in the geographic
areas in which York and Global Forests operate.
The Purchase Consideration will be further funded through the issue of
additional York Shares amounting to R350m ("the New Equity"). Subscription for
the New Equity will be achieved via a claw-back rights offer to York
Shareholders, which is fully underwritten by Blackstar Investors Plc
("Blackstar"). Blackstar is the controlling shareholder of York, having recently
acquired their interests in York from companies owned and controlled by Ivor and
Solly Tucker. Shareholders are referred to the SENS announcement dated 6
November, 2006, in this regard.
The remainder of the Purchase Consideration will be discharged through loan
capital facilities made available to York. The Company has entered into an
agreement with Rand Merchant Bank, a division of FirstRand Limited, for the
provision of approximately R1.23bn in senior and mezzanine loan capital
facilities.
The Sellers have provided warranties to York which are normal in a transaction
of this nature.
4. Rationale for the Acquisition
The proposed Acquisition will result in York boosting its forestry ownership to
levels in terms of which more than 70% of the enlarged group`s forecast saw mill
log input, previously sourced at market spot prices per log ("the spot price"),
will be internally sourced. This accords with York`s strategy to secure the
supply of its timber on a long term, sustainable basis and more importantly, at
competitive input prices.
The impact of the anticipated input cost saving between the spot price, versus
own supply (via Global Forests and existing plantations owned by York), is
expected to materially enhance York`s earnings.
In addition, the management of York anticipates that log recoveries and
efficiencies historically achieved by Global Forests will approach levels
currently attained by York`s sawmills, resulting in further earnings accretive
contributions which are not currently derived by Global Forests on a stand alone
basis.
The Purchase Consideration is underpinned by the value of GFP`s forests.
The Acquisition will materially enhance York`s saw milling supply, securing its
position as a leading domestic forestry resource company, capable of supplying a
buoyant market which continues to be fuelled by unprecedented infrastructure and
construction growth rates, both locally and abroad. York remains the only JSE
listed timber company in terms of which investors are able to gain focused
exposure to assets of this nature.
5. Suspensive conditions
The Acquisition is conditional, inter alia, on the fulfillment of the following
outstanding suspensive conditions:
5.1 approval by the Exchange Control Department of the South African Reserve
Bank to the Transaction no later than 31 May 2007;
5.2 approval by the JSE Limited ("the JSE") and any other relevant regulatory
authorities having jurisdiction over the Transaction being obtained no later
than 15 June 2007;
5.3 approval by York Shareholders by no later than 9 July 2007; and
5.4 approval by the Competition Authorities by no later than 9 July 2007.
6. Circular to shareholders
The Acquisition is categorised as a reverse take-over in terms of the Listings
Requirements of the JSE. A circular, incorporating the details of the claw-back
rights offer, revised listing particulars and a notice of general meeting of
shareholders will be posted to York Shareholders in due course.
7. Renewal of cautionary announcement
Further announcements will be made on SENS as soon as the reviewed financial
effects and the salient dates and times of the Acquisition are finalised.
Accordingly, York Shareholders are advised to exercise caution when trading in
their securities until such time as a further announcement is made.
Pretoria
2 April 2007
Corporate Advisor and Sponsor
Metier Advisory (Pty) Limited
Transaction Arranger and Equity Underwriter
Blackstar
Equity Participant and BEE Funder
Industrial Development Corporation of South Africa Limited
Attorneys and Corporate Law Advisors
Edward Nathan Sonnenbergs Inc.
Competition Law Advisors
Webber Wentzel Bowens
Debt Arrangers and Underwriters
Rand Merchant Bank (a division of FirstRand Limited)
Tax Advisors
Deloitte & Touche
Financial Advisor to the Sellers
Goldman Sachs International
Legal Advisor to the Sellers
Werksmans Inc
Date: 02/04/2007 11:59:50 Produced by the JSE SENS Department.
