| Mon 25 Feb 2008, 12:37 | | KGH - Kagisano - Restructuring and withdrawal of cautionary announcement |
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KGH
KGH
KGH - Kagisano - Restructuring and withdrawal of cautionary announcement
KAGISANO GROUP HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 2002/003827/06)
(JSE code: KGH ISIN: ZAE000098448)
("Kagisano" or "the company")
RESTRUCTURING OF EXISTING R120 MILLION LOAN FACILITIES
PROCUREMENT OF NEW R100 MILLION LONG TERM LOAN FACILITY
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Shareholders are referred to the cautionary announcement dated 22 January
2008.
Shareholders are advised that Kagisano has:
- rationalised and restructured its existing R120 million loan
facilities; and
- entered into a R 100 million long term loan facility agreement with
Blackstar Investors PLC ("Blackstar") ("the Blackstar loan facility"),
subject to the suspensive conditions set out below.
2. RATIONALE FOR THE BLACKSTAR LOAN FACILITY
Kagisano is a financial services group that targets the financial needs of
clients in the Living Standards Measure 4 to 7 bands with a broad range of
financial services products. These include credit products, cellular
products, insurance products, employee benefits and other financial
solutions.
The Blackstar loan facility is a long term loan facility which will enable
Kagisano to grow its advances book to more than R300 million. Blackstar`s
involvement results in a strategic alliance in respect of Kagisano`s
existing and future funding requirements.
3. BACKGROUND ON BLACKSTAR
Blackstar is an investment company, incorporated in England and Wales and
is listed on the Alternative Investment Market, operated by the London
Stock Exchange. Blackstar focuses on investments in Southern Africa and has
made investments inter alia in:
- The York Timber Organisation Limited
- Mvelaphanda Resources Limited via Afripalm Resources
- Kulungile Metals Group (Pty) Limited
- DCD-Dorbyl (Pty) Limited
Blackstar is advised in South Africa by Blackstar Fund Managers (Pty)
Limited.
4. TERMS AND CONDITIONS OF THE BLACKSTAR LOAN FACILITY
4.1 On 19 February 2008 Kagisano entered into an agreement to obtain the
Blackstar loan facility, subject to the fulfilment of the suspensive
conditions listed in 5 below.
4.2 The terms of the Blackstar loan facility are as follows:
4.2.1 The principal amount of the Blackstar loan facility is R100 million.
The full Blackstar loan facility has to be drawn down by 31 December
2008.
4.2.2 The amount drawn will be classified as a term loan, repayable by not
later than 31 December 2011.
4.2.3 Blackstar will have the right at any stage up to 31 December 2011 to
subscribe from time to time for a maximum of 16 666 667 Kagisano
ordinary shares for cash at an issue price of 300 cents per Kagisano
ordinary share and thereafter Kagisano will repay the loan to
Blackstar in an amount equal to the subscription amount.
4.2.5 Security provided for the loan is normal for loans of this nature.
4.2.6 Blackstar is entitled to nominate one director for appointment to the
Kagisano board.
4.2.7 The loan will bear interest at a rate linked to the prime rate,
payable quarterly.
5. SUSPENSIVE CONDITIONS
The Blackstar loan facility is subject to the fulfilment inter alia of the
following suspensive conditions:
5.1 the Blackstar loan facility Agreement as well as all underlying and
supporting contracts are signed by all the relevant parties;
5.2 the Blackstar loan facility Agreement as well as all underlying and
supporting contracts have become unconditional;
5.3 Blackstar has received copies of the Memoranda and Articles of Association,
Certificates of Incorporation, Certificates to Commence Business and
Certificates of Change of Name of Kagisano and all its subsidiaries;
5.4 Blackstar has received copies of Kagisano`s most recent Audited
Consolidated Financial Statements and Unaudited Consolidated Management
Accounts;
5.5 approval is obtained from Kagisano`s board of directors;
5.6 approval is obtained from Kagisano`s shareholders;
5.7 all required regulatory approvals have been obtained.
6. IRREVOCABLE UNDERTAKINGS
Shareholders, who directly and indirectly hold ordinary shares representing 80%
of the issued share capital of Kagisano have signed irrevocable undertakings to
support the implementation of the Blackstar loan facility and all ancillary
matters, including the subscription option referred to above.
7. UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE BLACKSTAR LOAN FACILITY
The unaudited pro forma financial effects set out below are provided for
illustrative purposes only to provide information about how the Blackstar loan
facility may have impacted on Kagisano`s results and financial position. 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
Blackstar loan facility. The unaudited pro forma financial effects are based on
the audited annual financial information of Kagisano at 31 August 2007. The
directors of Kagisano are responsible for the preparation of the unaudited pro
forma financial effects.
Audited Pro forma Change Pro forma Change
before unaudited unaudited
the after after
Blackstar Blackstar Blackstar
loan subscribed with no
facility for subscribtion
31 August 16 667 666 31 August
2007 shares 2007
31 August
2007
Earnings per share 31.34 34.94 11.49% 35.62 13.66%
(cents)
Headline earnings 31.48 35.06 11.37% 35.77 13.63%
per share (cents)
Net asset value per 93.51 126.66 35.45% 97.27 4.02%
share (cents)
Net tangible asset 93.51 126.66 35.45% 97.27 4.02%
value per share
(cents)
Weighted average 101 640 118 307 101 640
shares in issue
(`000)
Shares in issue at 115 750 132 417 115 750
period end (`000)
Notes:
1. The unaudited pro forma financial effects on the earnings and headline
earnings per share were prepared on the basis of the following assumptions:
- the Blackstar loan facility was implemented on 1 September 2006, using
a weighted average of 101 640 000 Kagisano ordinary shares in issue
for the year ending 31 August 2007;
- The additional funding will be utilised to fund the growth on the
advances book at R10 million per month, while any surplus funds will
be re-invested at an interest rate of 9% per month;
2. The unaudited pro forma financial effects on the net asset value and net
tangible asset value per share were prepared on the basis that the
Blackstar loan facility was effected on 31 August 2007.
3. The "Before the Blackstar loan facility" column has been extracted without
adjustment, from the audited annual results of Kagisano for the year ended
31 August 2007.
4. The "After Blackstar subscribed for 16 666 667 shares" earnings and
headline earnings per share have been based on the following assumptions:
- Blackstar has subscribed for the full 16 666 667 Kagisano ordinary
shares on 1 September 2006;
- Kagisano will earn an additional net profit after taxation from loans
and advances of R10.1 million as a result of the Blackstar loan
facility;
- Finance cost was payable on 50% of the Blackstar loan facility at an
interest rate linked to prime;
- Costs relating to the Blackstar loan facility of R 2.5 million were
written off to the income statement.
5. The "After Blackstar with no subscribtion" earnings and headline earnings
per share have been based on the following assumptions:
- Blackstar has subscribed for no Kagisano ordinary shares on 1
September 2006;
- Kagisano will earn an additional net profit after taxation from loans
and advances of R5 million as a result of the Blackstar loan facility;
- Finance cost was payable on the Blackstar loan facility at an interest
rate linked to prime;
- Costs relating to the Blackstar loan facility of R 2.5 million were
written off to the income statement.
6. The " After Blackstar subscribed for 16 666 667 shares" net asset value and
net tangible asset value per share have been based on the assumption that
Blackstar has subscribed for the full 16 666 667 ordinary Kagisano shares
on 31 August 2007.
7. The "After Blackstar with no subscribtion " net asset value and net
tangible asset value per share have been based on the assumption that
Blackstar has subscribed for no ordinary Kagisano shares on 31 August 2007.
8. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Caution is no longer required to be exercised by shareholders when dealing in
their securities.
9. DOCUMENTATION
A circular with full particulars of the proposed Blackstar loan facility and
ancillary matters and a notice of a general meeting of shareholders, will be
mailed to shareholders in due course.
Johannesburg
25 February 2008
Designated adviser Exchange Sponsors
Auditors Deloitte & Touche
Transaction arranger Blackstar
and Funder
Attorneys to Edward Nathan Sonnenbergs
Blackstar
Attorneys to Edelstein-Bosman Incorporated
Kagisano
Date: 25/02/2008 12:37:33 Produced by the JSE SENS Department.
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