| Thu 20 Dec 2007, 15:10 | | KLG - Kelgran - Acquisition by Kelgran and renewal of cautionary Announcement |
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KLG
KLG
KLG - Kelgran - Acquisition by Kelgran and renewal of 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 OF THE ENTIRE ISSUED ORDINARY SHARE CAPITAL OF GENERATOR
AND PLANT HIRE (SA) (PROPRIETARY) LIMITED ("GPH") AND RENEWAL OF CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION
Kelgran shareholders are advised that an agreement has been concluded by
Kelgran ("the purchaser"), in terms of which Kelgran will acquire the
entire issued ordinary share capital of GPH ("the sold shares") for an
aggregate consideration of R80 million ("the acquisition").
The aforesaid agreement has been concluded between the purchaser, National
Pride Trading 245 (Pty) Limited ("National Pride"), an 84,2% shareholder in
Kelgran, the trustees for the time being of the Anthony Michael Muller
Family Trust ("the A M Muller Family Trust"), the holder of 33,33% of the
issued ordinary share capital of GPH, the trustees for the time being of
the Dave Pretorius Family Trust ("the Pretorius Family Trust"), the holder
of 33,33% of the issued ordinary share capital of GPH, the trustees for the
time being of the Bill Muller Family Trust ("the B Muller Family Trust),
the holder of 16,67% of the issued ordinary share capital of GPH, and the
trustees for the time being of the G J M Family Trust ("the G J M Family
Trust"), the holder of 16,67% of the issued ordinary share capital of GPH.
Hereinafter the A M Muller Family Trust, the Pretorius Family Trust, the B
Muller Family Trust and the G P H Family Trust will be collectively
referred to as "the sellers".
2. BACKGROUND TO GPH
GPH was founded in 1990. It operates in the generator rental, generator
hire and generator sales market. GPH`s head office is situated in Midrand,
South Africa and it has branches in Cape Town, Durban and Richard Bay. It
offers both long- and short-term rentals to various clients sourced from
the construction and mining industry, parastatals and local authorities,
cellphone companies, shipping lines as well as other commercial and
industrial customers. The variety of electrical generation equipment
supplied by GPH positively positions GPH to successfully manage its
clients` economic concerns such as are generally associated with power-
outages.
3. DETAILS OF THE ACQUISITION
In terms of the sale of shares agreement between Kelgran, National Pride
and the sellers, concluded on 14 December 2007 ("the agreement"), Kelgran
has transacted to acquire the sold shares as well as all claims which the
sellers, individually and/or collectively may have against GPH ("the sold
claims"), for an aggregate maximum consideration of R80 million payable as
to:
- R70 million in cash, by way of the issue of renounceable letters of
allocation in respect of ordinary shares in the capital of Kelgran
("consideration shares") at an issue price of R1 per share, which will
be subject to a vendor placing as contemplated in the Listings
Requirements of JSE Limited ("the JSE"), hereinafter referred to as
"the first tranche payment";
- a maximum amount of R5 million, at the election of the sellers either
in cash or by way of the allotment and issue of consideration shares
at the prevailing market price per Kelgran share as at the date on
which payment is to be effected, within 10 business days after the
date on which the actual net profits after tax for the 2009 financial
year has been determined by the auditors ("the second tranche
payment"). This payment is subject to the net profit after tax not
being less than R13 916 000, in which event the second tranche payment
shall be a lesser amount to be determined in accordance with the
formula stipulated in the agreement; and
- a maximum amount of R5 million, at the election of the sellers either
in cash or by way of the allotment and issue of consideration shares
at the prevailing market price per Kelgran share as at the date on
which payment is to be effected, within 10 business days after the
date on which the actual net profits after tax for the 2010 financial
year has been determined by the auditors ("the third tranche
payment"). This payment is subject to the net profit after tax not
being less than R19 482 400, in which event the third tranche payment
shall be a lesser amount to be determined in accordance with the
formula stipulated in the agreement.
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 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 conclusion by David Howard Pretorius and
Anthony Michael Muller (collectively referred to as the "key executives")
of written service and restraint agreements with Kelgran or a member of its
group, within 30 days of the signature date of the agreement. The
abovementioned written service and restraint agreements were entered into
between GPH and the key executives on 14 December 2007.
The acquisition is subject to the following remaining suspensive
conditions:
- within 70 days of the signature date of the agreement the securing, to
the extent necessary, of the unconditional approval of the Competition
Authorities to the conclusion and implementation of the agreement;
- within 30 days of the signature date of the agreement, each of Absa
Bank Limited ("Absa") and Imperial Bank Limited ("Imperial") agreeing
that William Patrick Muller, Glenton James Muller and the key
executives be released from any liability which they may have beyond
the effective date under guarantees, suretyships and indemnities in
favour of Absa and Imperial.
- that Kelgran shall use its reasonable endeavours to procure that a
circular including revised Listings particulars is posted on or about
31 March 2008, which document will contain a notice of a general
meeting which will call for such meeting on 21 days clear notice after
the date of posting, whereafter the resolutions passed at that meeting
will be registered if applicable and implemented as soon as possible
with a view of listing within 10 business days thereafter, on the
basis that:
- 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 171 111 111;
- a majority of independent Kelgran 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;
- a majority of independent Kelgran shareholders in general meeting
voting in favour of the acquisition; and
- all other regulatory approvals necessary to accomplish the
reconstruction and the listing, including the consent of the SRP being
granted as well as the approval of the competition authorities, if
applicable.
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 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 as may be
appropriate that the acquisition be approved with or without modification
by the shareholders of Kelgran in such general meeting. Such circular,
which circular will include revised Listings particulars, will be sent to
Kelgran shareholders in due course.
5. RATIONALE FOR THE ACQUISITION
The acquisition of GPH will add an additional lucrative component to the
group`s power distribution and power generation business, pursuant to the
acquisition of the business of Westingcorp Power Industries (Proprietary)
Limited ("Westingcorp") as announced on SENS on 4 December 2007. The
business of GPH will allow Kelgran to fulfil its various clients` long-
term, short-term and/or temporary need for back-up power generation.
6. INTENTION REGARDING THE REVERSE TAKE-OVER LISTING OF KELGRAN UNDER THE NAME
WPI HOLDINGS LIMITED
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 and GPH 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 RENEWAL OF CAUTIONARY ANNOUNCEMENT
Further to the acquisition and cautionary announcement dated 4 December
2007, shareholders are advised that shares in Kelgran will remain suspended
until successful implementation of the reverse take-over listing referred
to in that announcement and above. 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 in the 4 December 2007 announcement, as well as the financial
effects of the acquisition detailed above.
20 December 2007
Sponsor
Merchant Sponsors (Proprietary) Limited
Legal adviser to Kelgran
HR Levin Attorneys Notaries and Conveyancers
Legal adviser to the sellers
Fluxmans Incorporated
Date: 20/12/2007 15:10:01 Produced by the JSE SENS Department.
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