| Fri 29 Feb 2008, 15:53 | | TWP - TWP Holdings Limited - Acquisition by TWP of |
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TWP
TWP
TWP - TWP Holdings Limited - Acquisition by TWP of TPS Architects (Proprietary)
Limited ("TPS") and cautionary announcement
TWP Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2003/025640/06)
Share code: TWP
ISIN: ZAE000110763
("TWP" or "the company")
Acquisition by TWP of TPS Architects (Proprietary) Limited ("TPS") and
cautionary announcement
Introduction
Nedbank Capital, a division of Nedbank Limited, is authorised to announce that
TWP has entered into an agreement dated 28 February 2008 to acquire 100% of the
issued share capital of, and shareholders` loans to, TPS from Messrs FG
Pellegrini, JAJ Tyser, GF Steenekamp, PG Levick and CJ Jearey ("the vendors")
("the transaction").
The vendors have signed employment agreements to remain on for at least three
years and have been incentivised to ensure that TPS performs well.
Nature of business
TPS is a firm of consulting architects and interior designers with its core
business being the provision of architectural and designing services. It is one
of South Africa`s largest firms of industrial and commercial architects.
Rationale for the transaction
TPS is of strategic importance to TWP for the following reasons:
its business compliments TWP`s global expansion and growth strategy;
TPS has an excellent order book and is currently involved in a number of
prestigious projects, including the Gautrain Rapid Rail Link, Number 1 Sandton
Drive, the Zurich Insurance headquarters and several self-sustaining housing and
mining developments;
TWP has maintained a close working relationship with TPS for the past 25 years;
TWP and TPS share common clients; and
TPS has numerous projects globally and particularly in sub Saharan Africa.
Conditions precedent to the transaction
The transaction is subject to the fulfilment of the following conditions
precedent:
the satisfactory conclusion by TWP of a due diligence investigation of TPS on or
before 30 April 2008;
approval by the Competition Authorities on or before 30 May 2008;
approval by TWP`s board of directors, after completion of the abovementioned due
diligence, of the transaction;
various other regulatory approvals, including but not limited to the JSE Limited
("JSE").
The transaction agreement contains terms, conditions and warranties which are
standard for an agreement of this nature.
Effective date of the transaction
The effective date of the transaction will be 1 March 2008 ("effective date").
TWP confirms that the articles of association of TPS will be amended, if
required, to conform with Schedule 10 of the JSE Listings Requirements.
Purchase consideration
The purchase consideration for the transaction is R138 million. This has been
calculated using a multiple of six and an estimated combined profit after tax
("PAT") for the financial year ending 29 February 2008 of R23 million for TPS
and all its subsidiaries ("2008 PAT"). If the 2008 PAT is lower than R23
million, the purchase price will reduce pro rata. The purchase consideration
will be settled as follows:
25% in cash to the vendors; and
75% in TWP ordinary shares which will be issued at a value calculated using the
10 day volume weighted average price per TWP ordinary share prior to the
effective date ("consideration shares").
The purchase consideration will be settled on the payment date, being the first
business day after the closing date. The closing date is the third business day
after the fulfilment of the conditions precedent.
The consideration shares will be kept as security by TWP in terms of a separate
pledge and cession. The consideration shares will provide continuing general
covering security for the compliance by the vendors of their obligations
contained below.
TPS have certain PAT targets to meet for each of the 2009, 2010 and 2011
financial years. If, at the end of the 2011 financial year, the aggregate of
these PAT targets ("aggregate target PAT") are exceeded, the vendors will be
eligible to a cash bonus of 50% of the difference between the aggregate achieved
PAT and the aggregate target PAT. The sum of the purchase consideration and the
cash bonus has been capped at R197.6 million.
If the aggregate target PAT is not met, the vendors will have to pay back a cash
amount to TWP. This cash amount will increase as the shortfall between the
aggregate target PAT and the aggregate achieved PAT increases.
Categorisation of the transaction in terms of the JSE Listings Requirements and
cautionary announcement
The transaction is a Category 2 transaction in terms of Section 9.5 of the JSE
Listings Requirements and as such no action is required by TWP shareholders.
Until such time as the financial effects of the transaction are published,
shareholders are advised to exercise caution when dealing in the company`s
shares.
Melville
29 February 2008
Investment bank, corporate adviser and sponsor Attorneys
- Nedbank Capital, a division of Nedbank -TLi Incorporated-
Limited -
Independent reporting accountants and
auditors
-PWC-
Date: 29/02/2008 15:53:50 Produced by the JSE SENS Department.
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