| Tue 4 Dec 2007, 11:42 | | KLG - Kelgran - Acquisition and cautionary announcement |
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KLG
KLG
KLG - Kelgran - Acquisition and cautionary announcement
KELGRAN LIMITED
Incorporated in the Republic of South Africa
(Registration number 1975/004595/06)
Share code: KLG & ISIN: ZAE000003885
("Kelgran" or "the company")
ACQUISITION BY KELGRAN LIMITED ("KELGRAN") OF THE BUSINESS OF WESTINGCORP
POWER INDUSTRIES (PROPRIETARY) LIMITED ("WESTINGCORP") AND A CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION
Kelgran Limited shareholders ("Kelgran shareholders") are advised that an
agreement has been concluded between Kelgran ("the purchaser"), National
Pride Trading 245 (Pty) Limited ("National Pride"), an 84,2% shareholder in
Kelgran, Westingcorp ("the seller"), an unlisted private company, and Peter
Carl Bosch ("Bosch"), the sole shareholder of Westingcorp, in terms of
which Kelgran will acquire the business of Westingcorp ("the business") as
a going concern for a consideration of R66 million ("the acquisition").
2. BACKGROUND TO WESTINGCORP
Westingcorp was founded in 1998 by Bosch, initially as a refurbisher of
switchgear supplied for low cost projects. Since then, Westingcorp has
expanded into the design, assembly, supply, repair and maintenance of a
wide range of switchgear, transformers, mini-substations and circuit
breakers.
Westingcorp operates in the power distribution and power generation
markets. Its head office is situated in Centurion, South Africa. It
undertakes projects all over South Africa as well as in various African
countries such as Mauritius, Zambia, Mozambique, Botswana, the Democratic
Republic of Congo and Zimbabwe. Westingcorp holds distributorships in
respect of Driescher Wegberg and PME Electronics Limited. It is also
involved in a joint venture with Tavrida Electric Limited in respect of the
design, installation and maintenance of circuit breakers.
Westingcorp has strategic partnerships with:
- JVS Projects, which act as technical support partner to Siemens in
Zambia and Zimbabwe; and
- Afrimation, an automation specialist.
3. DETAILS OF THE ACQUISITION
In terms of the sale of business agreement between Kelgran, National Pride,
Westingcorp and Bosch, concluded on 22 November 2007 ("the agreement"),
Kelgran has transacted to acquire the business as a going concern for an
aggregate consideration of R66 million payable as to R61 million by way of
the allotment and issue of consideration shares in Kelgran and as to R5
million by way of the issue of renounceable letters of allocation which
will be subject to a vendor placing as contemplated in the Listings
Requirements of JSE Limited ("the JSE").
The agreement provides for the reconstruction of the share capital of
Kelgran, inter alia, such that the current issued share capital of Kelgran
will be consolidated and restructured into 10 111 111 ordinary shares of
one cent par value each and by the increase of the authorised share capital
to 500 000 000 shares of one cent each ("the reconstruction").
It is stipulated in the agreement that Kelgran and Westingcorp will procure
the issue of 25 million Kelgran shares of one cent each (i.e. after the
reconstruction) as an issue of shares for cash at a price of R1 per share
in order to raise cash to fund the working capital requirements of the
business. The issue of shares for cash will be implemented in accordance
with the Listings Requirements of the JSE.
It is further stipulated that the parties will as soon as possible after
the signature date of the agreement, co-operate and use their reasonable
efforts to apply to the AltX for approval to list on the AltX and to apply
to the JSE for a transfer of Kelgran`s listing from the Business sector:
mining and minerals of the JSE List to the AltX.
Conditions precedent
The acquisition is subject to the following suspensive conditions that by
not later than 30 June 2008:
- the reconstruction is complete in all respects including the
registration of all special resolutions of Kelgran necessary to give
effect to the reconstruction being passed and registered by the
Registrar of Companies;
- the JSE granting an application by Kelgran to transfer its listing
from the Business sector: mining and minerals, of the JSE List to the
AltX in respect of a total number of issued shares of 101 111 111;
- a majority of independent shareholders in general meeting agreeing to
a waiver of the right to a mandatory offer in terms of the SRP Code
pursuant to the change of control arising from the acquisition of the
business;
- the audited financial statements of the business as at 29 February
2008 are prepared to the satisfaction of Kelgran, attached to the
agreement and initialled by the parties;
- any pre-emptive rights which are required to be waived in order to
allow Kelgran to acquire the shares which form part of the business
are waived; and
- all other regulatory approvals necessary to accomplish the
reconstruction and the listing including the consent of the SRP being
granted.
The parties have agreed to a reconstitution of the board of directors of
Kelgran in accordance with the directions of the seller and to the change
of name of Kelgran to WPI Holdings Limited or such other name as the
Registrar of Companies may allow. The agreement includes terms and
extensive warranties considered standard for a transaction of this nature.
The effective date of the agreement is 1 March 2008. National Pride,
holding in aggregate 84,2% of the issued shares in Kelgran, has given an
irrevocable undertaking to vote in favour of the above transactions at any
general meeting of Kelgran.
The financial effects in relation to the acquisition will be published in
due course. Until such time the company will remain under cautionary.
4. FURTHER DOCUMENTATION
The acquisition, reconstruction, issue of shares for cash, change of name
and reverse listing will be described in a circular to Kelgran shareholders
containing a notice of general meeting wherein it will be proposed in such
ordinary and special resolutions as may be required and be appropriate that
the acquisition, reconstitution, issue of shares for cash, change of name
and reverse listing be approved with or without modification by the
shareholders of Kelgran in such general meeting. Such circular will be sent
to Kelgran shareholders in due course.
5. RATIONALE FOR THE ACQUISITION
The rationale for the acquisition is to facilitate the reconstitution of
Kelgran so as to meet the Listings Requirements of the JSE in respect of
listing. The board of directors will seek the restructuring of Kelgran with
a view to applying for a listing under the name WPI Holdings Limited or
such other name as the Registrar of Companies may allow.
6. INTENTION REGARDING THE REVERSE TAKE-OVER LISTING OF WPI
Kelgran has been categorised by the JSE as a cash shell with the obligation
of acquiring viable assets that satisfy the conditions for listing in order
to remain listed. The reverse take-over listing of Kelgran is subject,
inter alia, to confirmation by the AltX Advisory Committee that the assets
acquired from Westingcorp are eligible for listing on AltX and the
subsequent approval of the relevant circulars to shareholders by the JSE.
An application to the AltX Advisory Committee for such reverse listing,
supported by a business plan of the reconstructed Kelgran under the name
WPI Holdings Limited, is required to be submitted by no later than 31
January 2008, and if a positive recommendation is made by the AltX Advisory
Committee then a circular together with revised listing particulars will be
dispatched to shareholders by no later than 31 March 2008. Failure to
comply with the deadlines will result in the termination of Kelgran to
which the company has agreed.
Shareholders are cautioned in accordance with paragraph 9.24 of the
Listings Requirements of the JSE that there is no certainty that the JSE
will allow the listing of the company to continue following the
acquisition.
7. SUSPENSION OF KELGRAN AND CAUTIONARY ANNOUNCEMENT
Shareholders are advised that shares in Kelgran will remain suspended until
successful implementation of the reverse take-over listing referred to
above. Furthermore, shareholders are advised that the Company has entered
into negotiations, which if successfully concluded may have a material
effect on the price of Kelgran`s shares. Accordingly, shareholders are
advised to continue exercising caution when trading in Kelgran shares until
a further announcement is made, setting out the financial effects of the
acquisition detailed above and the outcome of the negotiations mentioned in
this paragraph 7.
4 December 2007
Sponsor
Merchant Sponsors (Proprietary) Limited
Legal adviser
HR Levin Attorneys Notaries and Conveyancers
Auditor
KPMG Incorporated
Date: 04/12/2007 11:42:01 Produced by the JSE SENS Department.
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