| Fri 24 Aug 2007, 15:45 | | FPF - Finbond Property Finance Limited - Acquisiti |
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FPF
FPF
FPF - Finbond Property Finance Limited - Acquisition of Blue Chip
Finbond Property Finance Limited
(Previously Quantum Leap Investments 527 (Proprietary) Limited)
(Incorporated in the Republic of South Africa)
(Registration number: 2001/015761/06)
Share code: FPF & ISIN: ZAE000097259
("Finbond" or "the Company")
ACQUISITION OF BLUE CHIP FINANCE NO.1 (PROPRIETARY) LIMITED ("BLUE CHIP
NATIONAL") AND BLUE CHIP FINANCE WESTERN CAPE (PROPRIETARY) LIMITED ("BLUE CHIP
NATIONAL") (COLLECTIVELY "BLUE CHIP")
1 Introduction
Finbond shareholders are referred to the cautionary announcement issued by the
Company on 16 July 2007 and the renewal of the cautionary announcement contained
in the announcement of the Excel Group Acquisition on 15 August 2007 and are
advised that Finbond has concluded agreements to acquire 50% of the shares in
and claims against Blue Chip National as well as of the shares in and claims
against Blue Chip Western Cape (collectively "the Acquisitions").
2 About Blue Chip National and Blue Chip Western Cape
Blue Chip is a South African financial services organisation that specialises in
the design and delivery of unique value and solution-based term lending options
tailored around borrower requirements rather than institutionalised lending
policies.
Blue Chip is an owner-managed term lending company addressing a focussed
customer profile and delivering branded products through low cost delivery
platforms. Blue Chip commenced trading in 1994 and currently consists of a
national branch network of some 57 `banking hall` type branches where direct
contact with clients is possible. These branches offer financial advice, short-
term, medium term and long term loans and affordable housing products to
customers. The aforementioned brings about a continued and long term business
relationship with the clients and enables Blue Chip to build a solid client base
to ensure future growth. All branches within the group operate on the Nupay
System. This system works very well and allows for accurate control on a daily
basis.
Blue Chip National is headquartered in Bloemfontein and has 40 branches
predominantly in the Free State, Gauteng, North West and Northern Cape and Blue
Chip Western Cape is headquartered in Stellenbosch, and has a network of 17
branches in the Western Cape.
3 Rationale for the Acquisitions
The Acquisitions are aimed at enhancing Finbond`s existing term lending volumes
and allowing Finbond to expand its national branch network in the black mass
term loan market with Blue Chip`s 57 branches.
This branch network will allow Finbond to market existing mortgage loan products
to the up and coming black middle class. Significant shareholder value will
result from focussed and intensified efforts to drive incremental core business
and related products through this significant channel.
This acquisition also serves to further diversify Finbond`s income streams.
4 Details of the Acquisitions
4.1 Blue Chip Finance Western Cape
Finbond has acquired Blue Chip Finance Western Cape for a total consideration of
R42 500 000 which will be settled by two cash payments:
- an initial payment of R25 500 000; and
- a final cash payment of R17 000 000, after Blue Chip Western Cape has
produced accounts for the year ending 29 February 2008.
The sellers of Blue Chip Finance Western Cape have warranted that the company
will produce a net profit after tax of R8 500 000 for the year ending 29
February 2008. For every R1 that the actual net profit after tax differs from
the warranted profit, the consideration will be adjusted by R5,00 and the final
cash payment increased or decreased accordingly.
The vendor is Mr. Neels Schutte. The current MD Mr. Jacques Briel and other
executive management of Blue Chip Finance Western Cape will continue to manage
and grow the company following the Acquisitions. The acquisition of Blue Chip
Western Cape was effective 1 March 2007 and is subject the conclusion of a
successful due diligence investigation by Finbond and its external auditors.
4.2 Blue Chip Finance National
Finbond has acquired 50% of Blue Chip Finance National for a total cash
consideration of R36 750 000. The vendors are Martinus Johannes Els, Pierre Le
Roux, Ryno Engels, The Gerben Trust and other members of management. The current
CEO Mr. Johan Els and all other executive management of Blue Chip Finance will
still own 50% of the company and will continue to manage and grow Blue Chip
Finance National following the acquisition. The acquisition was effective 1
March 2007 and is subject to the conclusion of a successful due diligence by
Finbond and its external auditors.
5 Financial effects
Set out below are the pro forma financial effects of the Blue Chip Western Cape
and the Blue Chip National acquisitions on the pro forma financial information
as set out in the Finbond prospectus published by the Company on 30 May 2007.
The pro forma financial effects have been prepared for illustrative purposes
only, to provide information on how the respective acquisitions would have
affected the previously published pro forma financial information. The pro forma
financial effects are the responsibility of the directors of Finbond.
Blue Chip Western Cape
Pro forma Pro forma
before the after the
Acquisiton Acqusition
(cents) (cents) Change
Earnings and headline earnings per 9,9 11,6 17,2%
share
Diluted earnings and headline 7,8 9,2 17,9%
earnings per share
Net asset value per share 59,6 59,6 -
Tangible net asset value per share 37,4 31,7 (15,2%)
Notes and assumptions:
1 The amounts set out in the "Pro forma before the Acquisition" column have
been extracted from the pro forma financial information included in the
prospectus published by the Company on 30 May 2007
2 The adjustments have been based on the audited financial statements of Blue
Chip Western Cape prepared for the year ended 28 February 2007
3 It has been assumed that the cash element of the purchase consideration
will be funded from available cash that the company currently has on
deposit. As no interest income on this money was taken into account in the
pro forma financial information included in the prospectus, no further
adjustment has been made.
Blue Chip National
Pro forma Pro forma
before the after the
Acquisiton Acqusition
(cents) (cents) Change
Earnings and headline earnings per 9,9 11,8 19,2%
share
Diluted earnings and headline 7,8 9,3 19,2%
earnings per share
Net asset value per share 59,6 59,6 -
Tangible net asset value per share 37,4 28,8 (23,1%)
Notes and assumptions:
1 The amounts set out in the "Pro forma before the Acquisition" column have
been extracted from the pro forma financial information included in the
prospectus published by the Company on 30 May 2007
2 The adjustments have been based on the audited financial statements of Blue
Chip National prepared for the year ended 28 February 2007
3 It has been assumed that the cash element of the purchase consideration
will be funded from available cash that the company currently has on
deposit. As no interest income on this money was taken into account in the
pro forma financial information included in the prospectus, no further
adjustment has been made.
6 Financial effects
In light of the aforegoing, shareholders are advised that caution is no longer
required to be exercised by them in dealing in Finbond shares.
Pretoria
24 August 2007
DESIGNATED ADVISER:
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Date: 24/08/2007 15:45:01 Produced by the JSE SENS Department.
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