| Mon 28 Jan 2008, 17:21 | | CCI - CIC Holdings Limited - Acquisition |
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CCI
CCI
CCI - CIC Holdings Limited - Acquisition
CIC Holdings Limited
(Incorporated in the Republic of Namibia)
(Registration number 95/502)
(Registered as an external company in the Republic of South Africa)
(Registration number 1996/002672/10)
Share code: CCI & ISIN: NA0009174278
("CIC" or "the company")
ACQUISTION OF FURTHER INTEREST IN THE SHARE CAPITAL OF OTI AND ACQUISITION OF AN
INTEREST IN THE SHARE CAPITAL OF GEMINI MOON TRADING (PTY) LIMITED
1. INTRODUCTION
CIC is pleased to announce that it has concluded an acquisition of the remaining
29% interest in the share capital of Ocean Traders International (Pty) Limited
and Ocean Traders International Marketing (Pty) Limited (thereby owning an
effective interest of 100% in the abovementioned companies) and a further 14%
interest in the share capital of CIC (Swaziland) (Pty) Limited(thereby owning an
effective interest of 85%), (all companies hereinafter collectively referred to
as "OTI"), from Brian Nathan and Brenda Nathan ("vendors") of OTI in terms of
the original purchase agreement concluded in October 2005("OTI transaction").
CIC has also entered into an agreement for the acquisition of a 25% effective
interest in the share capital of in Gemini Moon Trading (Pty) Limited ("GMT
acquisition").
2. THE OTI TRANSACTION
2.1 BACKGROUND OF OTI
OTI operates its business in key facilities in Durban, Manzini, Maputo and Beira
and provides a full service offering including the purchase of stock, management
of debtors and sales, merchandising, warehousing and distribution. OTI
dominates the alcoholic beverages markets and has established itself as the
pioneer of the Fast Moving Consumer Goods ("FMCG") model in Mozambique. OTI has
a successful trading operation mainly into other African markets and its key
products include tobacco, alcoholic beverages and a limited range of FMCG
products.
2.2. RATIONALE FOR THE OTI TRANSACTION
The OTI transaction is part of CIC`s strategic objective to increase its
presence into other African countries by acquiring partners to broaden and
enhance its knowledge and product base. The OTI transaction represents the last
contemplated step in terms of a purchase agreement concluded with the vendors of
OTI in October 2005.
2.3 TERMS OF THE OTI TRANSACTION
CIC had entered into a purchase agreement with OTI in October 2005. In terms of
the purchase agreement the acquisition was effected in tranches with the first
tranche being a acquisition of 51% of the share capital in OTI which was
concluded in October 2005, the second being an acquisition of 20% of the share
capital in OTI which was concluded in December 2006 and the third tranche being
an acquisition for the remaining interest in the share capital of OTI. Details
of the acquisition of the first and second tranches have been disclosed in the
CIC Prospectus made available to shareholders on 22 November 2007.
The remaining interest in OTI (third tranche) was purchased on 3 December 2007
for a purchase consideration of R20,5 million and was settled in cash on 5
December 2007.
2.4 FINANCIAL EFFECTS OF THE TRANSACTION
The pro forma financial effects of the transaction are presented for
illustrative purposes only and because of their nature may not give a fair
reflection of CIC`s financial position nor of the effect on future earnings
after the transaction. Set out below are the unaudited pro forma financial
effects of the transaction, based on the audited consolidated financial results
of CIC for the year ended 30 June 2007. The directors of CIC are responsible
for the preparation of the unaudited pro forma financial information.
Audited Pro forma after Change(%)
Before OTI
OTI transaction(1) transaction
Earnings per share 9.9 11.1 12.12%
(cents) (2)
Headline earnings 9.9 11.1 12.12%
per share (cents)(2)
Fully diluted 8.8 9.9 12.5%
earnings per share
(cents)(3)
Fully diluted 8.8 9.9 12.5%
headline earnings
per share (cents)(3)
Net asset value per 69.1 70.3 1.74%
share
Net tangible asset 56.7 47.9 (15.5)%
value per share
Notes and assumptions:
1. Extracted from the audited consolidated financial results of CIC for the
year ended 30 June 2007.
2. Based on a weighted average number of 180,133 million CIC shares in issue
during the year ended 30 June 2007.
3. Based on a weighted average number of 202,188 million CIC shares in issue
during the year ended 30 June 2007.
4. The earnings and headline earnings per share and fully diluted earnings and
headline earnings per share figures in the "Pro forma after OTI transaction"
have been calculated on the basis that the OTI transaction was effected on 1
July 2006.
5. The net asset value and the net tangible asset value per share figures in
the "Pro forma after OTI transaction" have been calculated on the basis that the
OTI transaction was effected on 30 June 2007.
3. GMT ACQUISITION
3.1 BACKGROUND OF GEMINI MOON TRADING (PTY) LTD ("GMT")
GMT is a holding company of Focus Retail Services (also known as VMS Western
Cape). Focus Retail Services is a sales and merchandising company providing the
services of selling and merchandising to various principals that represent blue-
chip international and South African companies that market household branded
products into the FMCG market in the Western Cape.
3.2 RATIONALE FOR THE GMT ACQUISITION
The acquisition of an effective 25% interest in GMT is in line with CIC`s
objective of expanding its footprint in the South African market.
3.3 TERMS OF THE GMT ACQUISITION
The effective date of the transaction is 1 September 2007.
Alan Blackwell ("the seller") disposed of 51% of the total issued share capital
of GMT to CIC and Thembeka Capital Limited for an initial purchase consideration
of R2,5 million.
A further deferred consideration may become payable subject to certain profit
warranties and terms negotiated by GMT over the course of 2008 and 2009.
CIC may, at the option of the seller, acquire an additional 24.5% within 180
days of receipt of the financial statements for the year ended 31 August 2010.
CIC also has a further option to acquire 10% of the issued share capital of GMT
within the same period.
With effect from 1 September 2007, CIC has nominated its 48% owned black
empowered entity, Golden Pond Trading (Pty) Limited, to take transfer and
session of the sale equity and claims in GMT as mentioned in 3.3.2 above.
3.4 FINANCIAL EFFECTS OF THE TRANSACTION
The financial effects of the GMT acquisition on CIC`s audited earnings and
headline earnings per share and fully diluted earnings and headline earnings per
share for the year ended 30 June 2007, had the transaction been entered into on
1 July 2006, and the financial effects on the net asset value and net tangible
asset value for the year ended 30 June 2007, had the acquisition been
implemented on that date, are not material but are earnings enhancing.
Stellenbosch
28 January 2008
BDO Questco (Pty) Limited - Designated adviser
PSG Capital (Pty) Limited - Corporate adviser
Date: 28/01/2008 17:21:31 Produced by the JSE SENS Department.
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