| Thu 6 Mar 2008, 15:42 | | DLV - Dorbyl - Disposal by Dorbyl of A 50% Interes |
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DLV
DLV
DLV - Dorbyl - Disposal by Dorbyl of A 50% Interest In Its Wholly Owned
Subsidiary Guestro Wheels (Proprietary) Limited
DORBYL LIMITED
(Incorporated in the Republic of SA)
(Registration Number 1911/001510/06)
(Share Code: DLV ISIN: ZAE000002184)
("Dorbyl")
Disposal by Dorbyl of A 50% Interest In Its Wholly Owned Subsidiary Guestro
Wheels (Proprietary) Limited And The Formation Of A Joint Venture With Magnetto
Wheels S.P.A
1. The Disposal
1.1 Shareholders are advised that Dorbyl has entered into a Joint Venture with
Magnetto Wheels S.p.A, ("Magnetto"), a company incorporated in Italy, in terms
of which Dorbyl will dispose of 50% of its interest in its wholly-owned
subsidiary Guestro Wheels (Proprietary) Limited ("Guestro") to Magnetto,
effective 31 March 2008 ("the disposal).
1.2 The disposal and the implementation thereof is subject to the fulfilment of
certain conditions precedent as described in 5 below.
2. Rationale For The Disposal
Guestro is engaged in the production and distribution of steel wheels for
passenger cars and light and heavy commercial vehicles. Magnetto is engaged in a
similar business of manufacturing and marketing steel wheels for the automotive
industry throughout the world. Dorbyl has been seeking a joint venture partner
to jointly operate and develop the business of Guestro. Guestro has not been
profitable for some time. Whilst Guestro has sufficient manufacturing capacity,
the present local demand is not sufficient to ensure the viability of the
business. Magnetto has the technical world class backup to assist Guestro to
secure additional local business and has easier access to international markets.
Magnetto wishes to expand its operations via a presence in South Africa. The
Joint Venture would ensure better utilisation of Guestro`s facilities, thereby
substantially increasing throughput and sales volumes to make the Joint Venture
profitable in the medium term.
3. Consideration And Application Of Consideration
3.1. It should be noted that whilst the consideration for the disposal amounts
to R20 million ("the disposal consideration"), the proceeds will be used by
Dorbyl to recapitalise Guestro prior to the transfer of 50% of the shareholding
to Magnetto. The net effect of this is that the value received by Dorbyl for the
disposal is R10 million.
3.2. The disposal consideration will be settled in cash on 3 April 2008.
4. Financial effects
4.1. The table below sets out the unaudited pro forma financial effects of the
disposal on the earnings, headline earnings, net asset value and net tangible
asset value per Dorbyl share, based on the assumptions that:
4.1.1. for purposes of the earnings and headline earnings per share
calculations:
- the disposal was effective during the interim period of six months ended
30 September 2007; and
- the disposal consideration was received by Dorbyl and injected into Guestro
on 1 April 2007 and that such consideration was invested by Guestro to earn an
after-tax return of 7.1% during the interim period ended 30 September 2007, with
Guestro being accounted for as an associate company;
4.1.2. for purposes of the net asset value and net tangible asset value per
share calculations, the disposal was effected on 30 September 2007:
Unaudited(1) Pro forma Change
Before after (%)
(cents) (cents)
(Loss)/earnings per share(2) (39.7) (80.9) (103.8)
Headline (loss)/earnings per (38.9) (29.3) 24.8
share(2)
Net asset value per share(3) 1 339 1 295 (3.3)
Tangible net asset value per 1 339 1 295 (3.3)
share(3)
Notes
(1) Extracted from the unaudited interim financial results of Dorbyl for the
six months ended 30 September 2007.
(2) Based on a weighted average of 33,924 million shares in issue during the
interim period ended 30 September 2007.
(3) Based on 33,924 million shares in issue at 30 September 2007.
4.2. The financial effects contained in the table in 4.1 above have been
prepared for the purposes of illustrating how the disposal would have affected
the relevant financial ratios of Dorbyl for the historic financial period
indicated and are pro forma only. Accordingly, such effects do not necessarily
represent a true reflection of the financial effects of the disposal on Dorbyl`s
current and future earnings and net asset value.
5. Conditions precedent
- The disposal is subject to, inter alia, the following conditions precedent:
the passing, and where applicable, the registration thereof by CIPRO, of a
number of resolutions relating to administrative matters to be implemented by
Guestro;
- the approval of the disposal by the Competition Authorities and Exchange
Control Authorities to the extent necessary;
- the conclusion of a lease agreement in respect of the operating premises
between Dorbyl and Guestro; and
- the conclusion of a Technical Assistance Agreement between Magnetto and
Guestro.
Johannesburg
6 March 2008
Sponsor
PSG Capital (Pty) Ltd
Legal Advisers
Hofmeyr Herbstein & Gihwala Inc.
Date: 06/03/2008 15:42:33 Produced by the JSE SENS Department.
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