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ATR
ATR
ATR - Africa Cellular Towers - Acquisition of JK Shelters (Pty) Limited and
withdrawal of cautionary announcement
Africa Cellular Towers Limited
(Incorporated in the Republic of South Africa)
(Registration number 2000/027374/06)
(JSE code: ATR ISIN: ZAE000088084)
("ACTOWERS" or "the company")
ACQUISITION OF JK SHELTERS (PTY) LIMITED AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION
1. Shareholders are advised that, further to the announcement dated
13 February 2007 and renewal thereof dated 28 March 2007, 10 May 2007 and
22 June 2007, ACTOWERS has entered into an agreement on 5 July 2007 for the
acquisition of 100% of the ordinary shares in and all shareholders claims
against JK Shelters (Pty) Limited ("JK Shelters") from Jose Carlos De Santa
Clara and Margeretha Louisa Christina Kruger ("the JK Shelters vendors"), for a
purchase consideration of R45 846 160 ("the JK Shelters transaction").
1.2 Margeretha Louisa Christina Kruger, who is one of the JK Shelters vendors,
is the spouse of Chris Kruger who is the Managing Director of ACTOWERS and is
therefore regarded as a related party to ACTOWERS in terms of the Listings
Requirements of the JSE Limited ("the Listings Requirements"). Accordingly the
JK Shelters transaction is a related party transaction in terms of the Listings
Requirements.
1.3 A circular containing details of the JK Shelters transaction, incorporating
a fair and reasonable opinion of the Designated Adviser, will be mailed to
ACTOWERS shareholders.
2. Background to JK Shelters
2.1 JK Shelters manufactures and supplies shelters to the cellular phone tower
market throughout Africa and operates from industrial premises adjoining
ACTOWERS.
2.2 Each cellular tower erected by ACTOWERS requires one shelter at its base to
house equipment for cellular communication.
3. Terms of the JK Shelters transaction
3.1 The purchase consideration in terms of the JK Shelters transaction is R45
846 160. The purchase consideration will be discharged as follows:
- R13 753 848 in cash;
- R32 092 312 by way of the issue and allotment of 23 772 083 ACTOWERS
ordinary shares at an issue price of 135 cents per share, being a premium to the
30 day weighted average market price at the time that the JK Shelters
transaction was entered into.
3.2 The purchase consideration is based on the 28 February 2007 profit after
taxation for JK Shelters of R9 169 232 multiplied by a 5 times price earnings
ratio.
3.3 The key management of JK Shelters have entered into written employment
contracts and confidentiality and restraint agreements with ACTOWERS. The JK
Shelters vendors have also entered into confidentiality and restraint agreements
with ACTOWERS.
4. Rationale for the acquisition
The rationale for the JK Shelters transaction is inter alia as follows:
- The business operations of ACTOWERS and JK Shelters are complementary.
However JK Shelters is not dependent of ACTOWERS for its business operations or
profitability;
- The strong growth of the cellular industry in emerging markets.
5. Conditions precedent to the JK Shelters transaction
The JK Shelters transaction is subject inter alia to the following conditions
precedent:
- approval of the transaction by the shareholders of JK Shelters in terms of
the JSE Listings Requirements; and
- approval of the transaction by the Competition Commission.
6. Unaudited pro forma financial effects of the transaction
6.1 The unaudited pro forma financial effects set out below are provided for
illustrative purposes only to provide information about how the acquisition of
JK Shelters and the issue of ACTOWERS ordinary shares may have impacted on
ACTOWERS` results and financial position. Due to the nature of the unaudited
pro forma financial information, it may not give a fair presentation of the
group`s results and financial position after the acquisition of JK Shelters.
The unaudited pro forma financial effects are based on the audited financial
information of ACTOWERS at 28 February 2007. The directors of ACTOWERS are
responsible for the preparation of the unaudited pro forma financial effects.
Before the JK Pro forma % Change
Shelters After the JK
transaction Shelters
audited transaction
28 February unaudited
2007 28 February 2007
Earnings per share 16.3 18.4 12.9
(cents)
Headline earnings per 16.1 18.2 13.2
share (cents)
Net asset value per 54.7 62.0 13.3
share (cents)
Net tangible asset 54.7 48.4 (11.6)
value per share
(cents)
Weighted average 193 425 217 197
shares in issue (000)
Shares in issue at 241 650 265 422
period end (000)
Notes:
(1) The unaudited pro forma financial effects on the results were prepared on
the basis that the acquisition of JK Shelters was completed on 1 March 2006.
(2) The unaudited pro forma financial effects on the financial position were
prepared on the basis that the acquisition of JK Shelters was completed on
28 February 2007.
(3) The "Before the JK Shelters transaction" column has been extracted without
adjustment, from the audited results of ACTOWERS for the 12 month period ended
28 February 2007.
(4) The "After the JK Shelters transaction" earnings per share and headline
earnings per share has been adjusted to include the loss in interest due to the
cash payment to the JK Shelters vendors;
(5) The "After JK Shelters transaction" net asset value and net tangible asset
value per share has been adjusted to include the following:
- the vendor placing and cash from internal resources to fund the
acquisition;
- the estimated transaction costs that have been written off against share
premium;
- the assets and liabilities of JK Shelters;
- the net tangible asset value per share excludes patents, trademarks and
goodwill.
(6) The unaudited pro forma balance sheet has not been adjusted for any
potential revaluations and allocations that may arise from the application of
IFRS 3 (Business Combinations) as IFRS 3 does not apply. The pro forma
financial information has been prepared on the basis that the excess of the
purchase price over the net asset value of the acquisition will comprise
goodwill of R34,4 million. Goodwill is carried at cost less any accumulated
impairment. Goodwill is not amortised.
7. Circular to shareholders
A circular to ACTOWERS shareholders containing details of the JK Shelters
transaction incorporating a fair and reasonable opinion from the Designated
Adviser and a notice of general meeting of shareholders will, subject to
approval by the JSE, be mailed to shareholders. Shareholders will be notified
once the JK Shelters transaction becomes unconditional.
8. Withdrawal of cautionary announcement
Caution is no longer required to be exercised by shareholders when dealing in
their securities.
Designated Adviser
Exchange Sponsors (Pty) Limited
Auditors and Reporting Accountants
Nexia HBLT Chartered Accountants (East Rand) Inc.
Attorneys
Fuxmans Inc.
Johannesburg
9 July 2007
Date: 09/07/2007 16:57:16 Produced by the JSE SENS Department.
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