| Thu 24 May 2007, 10:46 | | SHF-Steinhoff- Disposal of SA furniture interests |
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SHF
SHF
SHF-Steinhoff- Disposal of SA furniture interests to a Private Equity consortium
This announcement appears as a matter of record only
STEINHOFF INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration no. 1998/003951/06)
Ordinary share code: "SHF"
ISIN: ZAE000016176
("Steinhoff")
Disposal of the South African furniture interests of Steinhoff Africa Holdings
(Proprietary) Limited ("Steinhoff Africa") ("Furnco") to a Private Equity
consortium led by ABSA Capital, a division of Absa Bank Limited ("AbCap")
INTRODUCTION
Shareholders are referred to the announcement dated 12 April 2007 wherein it was
stated that Steinhoff had received approaches from certain Private Equity groups
for an acquisition of Furnco. Accordingly, the directors of Steinhoff are
pleased to announce that agreement has now been reached between, inter alia,
Steinhoff Africa and AbCap for the disposal of Furnco, in terms of a Leverage
Buyout ("the LBO"), to a consortium led by AbCap, and including Furnco
management and Black Economic Empowerment partners ("BEE") (collectively, "the
Consortium").
PURCHASE CONSIDERATION
The purchase consideration for Furnco amounts to R1,375 billion and will be
payable, effectively in cash upon fulfillment of all of the conditions precedent
detailed below.
OWNERSHIP OF FURNCO
Upon implementation of the LBO, Furnco will be owned by Furnco management, AbCap
and BEE (with an effective minimum BEE interest of 26%).
RATIONALE FOR THE LBO
Furnco manufactures and distributes a wide range of furniture and related
products. It consists of four sub-divisions: upholstered furniture, bedding,
non-solid case goods and solid case goods. These divisions are supported by an
import distribution business that imports household goods to supplement the
manufactured ranges and Roadway Logistics, which fulfils a large part of their
logistics needs. Furnco`s product offering include many of the major furniture
brands at price points ranging from the upper to lower ends of the market.
Furnco has developed into a substantial self-sustaining enterprise and its
current ownership structure within Steinhoff is not optimal for its continued
development and growth. Furnco`s strategy had independently emerged as one
driving towards the creation of an independent, broad-based household goods
business. This, accompanied by the composition of Newco shareholders, notably
Furnco management and BEE, are expected to deliver above-average growth
opportunities in terms of BEE procurement and shareholders` interests that are
perfectly aligned. Substantial synergies are also envisaged between Furnco and
the larger ABSA Group`s various economic development initiatives.
From a Steinhoff point of view, the LBO paves the way for the continuation and
acceleration of its strategy to expand Steinhoff`s Retail interests in South
Africa.
FINANCIAL EFFECTS
Although of substantial strategic importance to Steinhoff, the LBO is not
expected to have a material effect on Steinhoff`s headline earnings and net
asset value per share.
CONDITIONS PRECEDENT
The LBO is conditional on the fulfillment of the following conditions precedent:
- the conclusion of the related comprehensive sale agreements, funding
agreements and shareholders agreements (in respect of Newco); and
- the necessary Regulatory approvals, notably, the Competition Authorities being
obtained.
Wynberg, Sandton
22 May 2007
Sponsor Legal Advisors to AbCap
PSG Capital Limited Roodt Inc
Date: 24/05/2007 10:46:01 Produced by the JSE SENS Department.
