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HVL
HVL
HVL - Highveld - Sale of Transalloys Division and Withdrawal of Cautionary
Highveld Steel and Vanadium Corporation Limited
Registration No. 1960/001900/06
(Incorporated in the Republic of South Africa)
("Highveld" or "the Corporation")
Share code: HVL
ISIN code: ZAE000003422
SALE OF TRANSALLOYS DIVISION AND WITHDRAWAL OF CAUTIONARY
Sale of Transalloys Division
Highveld has entered into a sale and purchase agreement with Island House
Trading 86 (Proprietary) Limited, a subsidiary in the Renova Group of Companies
for the sale of Highveld`s Transalloys division. The effective date of the
transaction, 1 July 2007, is dependant upon the fulfillment of the following
conditions precedent:
1. Exchange Control Approval
2. Elimination of certain encumbrances over certain items of Property, Plant
and Equipment
3. Competition Authority Approval
4. The provision of a guarantee by a Renova Group Company
The purchase price is R780 million for property, plant and equipment, plus the
cost price of raw materials, stores, work in progress and finished goods, less
certain labour related provisions ("the purchase consideration"). The accounts
receivable and creditors of Transalloys as at 30 June 2007 will remain with
Highveld. The purchase consideration will be satisfied by the payment of a
deposit of R80 million after exchange control approval has been obtained. The
balance of the purchase consideration will be paid when all conditions precedent
have been met. The Board of Directors will consider possible uses of the
proceeds and until such time, the funds will be invested in a call account.
Transalloys is a wholly owned, unincorporated and independently managed division
of Highveld. Highveld acquired 65 per cent of Transalloys in 1976. In 1985,
the remaining 35 per cent stake was acquired and Transalloys became a wholly-
owned subsidiary of Highveld. Transalloys was divisionalised in July 1985.
Highveld is listed on the JSE under "Steel and Other Minerals". Evraz Group
S.A. has a 54.1 per cent interest in Highveld and Credit Suisse 24.9 per cent.
Transalloys produces manganese alloys, mainly refined Silicomanganese ("SiMn")
and Medium Carbon Ferromanganese ("MCFeMn"). The products are currently sold to
third party customers in South Africa and internationally as well as to other
divisions of Highveld. Transalloys has an approximate 6 per cent share of the
SiMn and 0.3 per cent share of the MCFeMn global markets.
The Board of Highveld considered the Transalloys assets non-core and
consequently agreed to sell.
The table below sets out the pro forma financial effects of the distribution on
the Corporation`s earnings per share ("EPS"), headline earnings per share
("HEPS"), net asset value per share ("NAV") and tangible net asset value per
share ("TNAV").
The pro forma financial effects have been prepared for illustrative purposes
only and, because of their nature, may not give a true reflection of the
Corporation`s financial position, changes in equity, results in operations or
cash flows. The pro forma financial effects are the responsibility of the
Corporation`s directors.
The Pro forma financial effects have further been based on the results for the
financial year ended 31 December 2006.
Results as Results adjusted Percentage
published for the impact of change (%)
(cents) the sale of
Transalloys
(cents)
EPS 1 122.6 1 265.1 +12.7
HEPS 1 049.0 1 191.5 +13.6
NAV 1 887.1 2 613.9 +38.5
TNAV 2 390.0 3 096.5 +29.6
Note:
1. The profit attributable to the net assets subject to the transaction were
as follows:
R`000 R`000 R`000
2004 2005 2006
Headline 183 497 (11 984) (79 666)
earnings/(loss)
Attributable 161 869 (15 202) (79 666)
earnings/(loss)
2. The pro forma financial effects were calculated based on 99 148 098
ordinary shares in issue as at 31 December 2006.
3. EPS and HEPS impact assumes an effective date of 1 January 2006 whilst NAV
and TNAV impact assumes an effective date of 31 December 2006.
4. The pro forma financial effects assume that the proceeds from the disposal
were invested at 9 per cent per annum and the attributable loss for 2006
was avoided.
Withdrawal of Cautionary
Shareholders are referred to cautionary announcements dated 11 June 2007 and 4
July 2007. As the sale of the Transalloys division has been finalised as
disclosed above, caution is no longer required to be exercised by shareholders
when dealing in their securities.
Emalahleni
18 July 2007
________________________________________________________________________________
Sponsor
J.P. Morgan Equities Limited
Corporate Law Advisors to Highveld Steel and Vanadium Corporation Limited
Tabacks Corporate Law Advisors
Attorneys to the Renova Group of Companies
Routledge Modise Attorneys
Corporate and Legal Advisor to the Renova Group of Companies
Rabin and Associates (Proprietary) Limited
Corporate Advisor to the Renova Group of Companies
Rand Merchant Bank Limited (a division of FirstRand Bank Limited)
Date: 18/07/2007 16:30:02 Produced by the JSE SENS Department.
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