| Thu 6 Sep 2007, 11:00 | | ADW - African Dawn - Acquisition of CIA Holdings a |
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ADW
ADW
ADW - African Dawn - Acquisition of CIA Holdings and Renewal of Cautionary
AFRICAN DAWN CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 2003/005353/06)
(JSE code: ADW & ISIN: ZAE000060703)
("African Dawn" or "the company")
ACQUISITION OF CIA HOLDINGS (PTY) LIMITED
RENEWAL OF CAUTIONARY ANNOUNCEMENT
10. INTRODUCTION
Shareholders are referred to the cautionary announcements dated 4 July 2007
and 30 August 2007.
African Dawn has purchased all the issued shares in and claims against CIA
Holdings (Pty) Limited ("CIA Holdings") from HJ Brits, Rumar Trust, F
Visnenza, A and L Du Toit Trust, SM Mellet, B Lategan, PH Marais, JJA
Taljaard, CM Kroon, JLJ Bezuidenhout Family Trust, Herman Breedt and
Associates, AJ van Heerden, DJ Ellerbeck, GJ van Zyl, JN Jansen Van
Rensburg, JG Allen, Shock Proof Investments 20 (Pty) Limited, LW Viljoen, F
Vermaak, SP Jonker and EM Botha ("the vendors") ("the acquisition") .
In terms of the Listings Requirements of the JSE Limited ("JSE") the
acquisition is classified as a category 3 transaction.
2. THE ACQUISITION
2.1 RATIONALE FOR THE ACQUISITION
The acquisition of CIA Holdings will provide critical mass to the Short
Term Secured Finance division of African Dawn. The acquisition will allow
African Dawn to increase its existing advances book to over R300 million,
resulting in increased earnings.
2.2. DESCRIPTION OF THE BUSINESS
CIA Holdings provides structured finance to individuals and developers of
low cost and affordable housing as well as providing property transfer
finance to buyers and sellers of residential, commercial and industrial
property.
2.3. TERMS AND CONDITIONS OF THE ACQUISITION
2.3.1. On 3 September 2007 African Dawn entered into an agreement to purchase,
with effect from 1 April 2007, all the issued share capital in and claims
against CIA Holdings. The purchase consideration is the lesser of:
- R94 912 885; or
- in the event of CIA Holdings` combined February 2008, 2009 and 2010 profit
after tax being less than the warranted profit after tax of R42 million,
the pro-rata difference between the combined audited warranted after tax
profit for the period ended February 2008, 2009 and 2010 and R42 million.
2.3.2. The purchase price is payable as follows:
Cash payment
R 57 million payable in cash as follows:
- R 16 million paid on 1 September 2007;and
- the balance payable being the actual cash received on disposal of the
assets owned by CIA Group Investments (Pty) Limited, limited to R41
million.
2.3.3 Share payment based on profit warranties being met
- R12 637 628 will be discharged by the issue and allotment of African Dawn
ordinary shares on 31 May 2008, at an issue price determined by the 90 day
Volume Weighted Average Price calculated over December 2007, January 2008
and February 2008;
- R12 637 628 will be discharged by the issue and allotment of African Dawn
ordinary shares on 31 May 2009, at an issue price determined by the 90 day
Volume Weighted Average Price calculated over December 2008, January 2009
and February 2009;and
- the balance of R12 637 628 will be discharged by the issue and allotment of
African Dawn ordinary shares on 31 May 2010, at an issue price determined
by the 90 day Volume Weighted Average Price calculated over December 2009,
January 2010 and February 2010.
2.3.4 African Dawn has completed a due diligence investigation on CIA Holdings
to its satisfaction.
2.3.5 F Vermaak, GJ van Zyl, LW Viljoen and DJ Ellerbeck, executive directors of
CIA Holdings, have signed restraint agreements with CIA Holdings for a
period of two years.
3 CONDITIONS PRECEDENT TO THE ACQUISITION
3.1 The proposed transaction is subject to the fulfilment of the following
conditions precedent:
- Competition Commission; and
- Securities Regulation Panel approval.
4. UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITION
The unaudited pro forma financial effects set out below are provided for
illustrative purposes only to provide information about how the acquisition
may have impacted on African Dawn`s results and financial position. The pro
forma financial effects have been prepared in accordance with International
Financial Reporting Standards. Due to the nature of the unaudited pro forma
financial information, it may not give a fair presentation of the company`s
results and financial position after the acquisition. The unaudited pro
forma financial effects are based on the audited financial information of
African Dawn at 28 February 2007. The directors of African Dawn are
responsible for the preparation of the unaudited pro forma financial
effects.
Before the Pro forma Change
acquisition After the
audited acquisition
28 February unaudited
2007 28 February
2007
Fully diluted 21.2
earnings per 38.22 80.28%
share (cents)
Headline earnings 21.2 17.06
per share (cents) (19.53)%
Net asset value 70.34 113.32 61.10%
per share (cents)
Net tangible 62.87 61.26 (2.57)%
asset value per
share (cents)
Weighted average 129,806,410 143,796,404
shares in issue
Fully diluted 145,997,815 159,987,809
shares in issue
at period end
Notes:
1. The unaudited pro forma financial effects on the results were prepared
on the basis that the acquisition was completed on 1 March 2006.
2. The "Before the acquisition" column has been extracted without
adjustment, from the audited results of African Dawn for the year
ended 28 February 2007.
3. The "After the acquisition" earnings and headline earnings per share
have been based on management accounts of CIA Holdings for the year
ending 31 March 2007.
4. The "After the acquisition" net asset value and net tangible asset
value per share have been adjusted to include the assets of the
acquisition and the estimated transaction costs have been written off
against share premium.
5. Goodwill of approximately R71, 1 million will arise on the
acquisition.
6. Fully diluted earnings per share is based on the assumption that 13
989 994 ordinary shares of R2.71 will be issued if profit warranties
are met. It is assumed that the share price of R2.71 is based on the
90 VWAP ended 31 August 2007.
5. RENEWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcements dated 4 July 2007
and 30 August 2007 and are advised that African Dawn is still involved in
negotiations, which are unrelated to the above acquisition, which if
successfully concluded may have a material effect on the price of the
company`s securities. Accordingly, shareholders are advised to exercise
caution when dealing in the company`s securities until a full announcement
is made.
Johannesburg
6 September 2007
Designated adviser Exchange Sponsors
Auditors Sizwe Ntsaluba
Attorneys Mageza Le Roux Vivier & Associates
Date: 06/09/2007 11:00:07 Produced by the JSE SENS Department.
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