| Mon 14 Apr 2008, 17:53 | | VUN - Vunani Limited - Acquisitions And Renewal Of |
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VUN
VUN
VUN - Vunani Limited - Acquisitions And Renewal Of Cautionary
Vunani Limited
(formerly Vunani Capital Holdings (Pty) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1997/020641/06)
(JSE code: VUN & ISIN: ZAE000110359)
("Vunani" or "the company")
ACQUISITIONS BY VUNANI OF CERTAIN ASSETS PREVIOUSLY OWNED BY EXCHANGE SPONSORS
(PROPRIETARY) LIMITED AND SME CORPORATE SOLUTIONS (PROPRIETARY) LIMITED FROM
WESSEL VAN DER MERWE AND OTHERS AND RENEWAL OF CAUTIONARY
1. INTRODUCTION
Further to the announcement dated 22 February 2008, shareholders are advised
that Vunani has entered into an agreement with two partnerships comprising the
following individuals, Wessel van der Merwe, Esna Colyn, Henk Engelbrecht, Stef
Greeff, Martha van der Westhuizen, Marion Degener, Stephen Barnett, Kim Van Es
and Cindy Van Der Knaap (collectively "the vendors") in respect of the
acquisition of certain business relationships, existing mandates, contracts and
the transfer of a team of JSE Limited ("JSE") Approved Executives and senior
management ("certain assets"), previously associated with SME Corporate
Solutions (Proprietary) Limited ("Corporate Solutions" or "Corporate Solutions
assets") and inter alia, Exchange Sponsors (Proprietary) Limited ("Exchange
Sponsors"), for a maximum purchase consideration of R90 750 000 ("the
acquisition"), with effect from 1 January 2008 or such later date as may be
permissible in terms of International Financial Reporting Standards ("the
effective date").
The abovementioned individuals will become executives of Vunani Corporate
Finance and Vunani Treasury Resources, respectively.
2. BACKGROUND TO THE ACQUISITION
Corporate Solutions, a privately owned business which is primarily involved in
corporate finance and advisory related services and its 70% owned subsidiary,
Exchange Sponsors and Treasury Resources ("Treasury Resources"), a division of
Corporate Solutions, which is primarily involved in treasury related activities,
was inter alia, founded by Wessel van der Merwe, Marius Meyer and Stephen
Barnett.
The following JSE Approved Executives will be executives of Vunani Corporate
Finance: Wessel van der Merwe, Henk Engelbrecht, Esna Colyn, Stef Greeff and
Marion Degener ("the team").
The team has been involved in more than 30 listings on the JSE Main Board and
Alternative Exchange ("AltX"), as well as large Black Economic Empowerment
("BEE") transactions, mergers, acquisitions and various other corporate finance
related transactions.
The executives of Vunani Treasury Resources will be Stephen Barnett, Kim Van Es
and Cindy Van Der Knaap.
3. TERMS AND CONDITIONS OF THE ACQUISITION
The maximum purchase consideration payable to the vendors for the Corporate
Solutions assets is R90.75 million which will be discharged as follows:
- R12 million in cash;
- R57.25 million by way of the issue and allotment of 57 250 000 Vunani
ordinary shares at an issue price of R1.00 (one Rand) per ordinary share,
being the market price at the time that the transactions were agreed upon;
and
- R21.5 million, which is dependent upon a warranted audited profit after
taxation of R19.5 million ("warranted PAT") being achieved for the year
ending 31 December 2008, by way of the issue and allotment of 21 500 000
Vunani ordinary shares at an issue price of R1.00 (one Rand) per ordinary
share, being the market price at the time that the transactions were agreed
upon. This portion of the purchase consideration will be adjusted on a pro
rata basis in the event that the warranted PAT is not met.
The vendors will become shareholders in Vunani subsequent to the acquisition.
The ordinary shares to be issued by Vunani to the vendors will be "locked up"
for a period of three years from the effective date.
The management team has entered into written employment contracts with Vunani
incorporating restraint of trade clauses.
All conditions precedent relating to the acquisition of the Corporate Solutions
assets have now been fulfilled.
4. PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITION
The unaudited pro forma financial effects of the acquisition on the forecast
results of the company for the year ending 31 December 2008 are set out below.
The pro forma financial effects reflect the impact that the acquisition might
have had on the earnings per share, fully diluted earnings per share and fully
diluted headline earnings per share of Vunani had it been effected on 1 January
2008, and the effect that the acquisition might have had on the net asset value
per share and net tangible asset value per share had it been effected on 31
December 2007. The pro forma financial effects, which are the responsibility of
the directors, are provided for illustrative purposes only and, because of their
pro forma nature, may not fairly present Vunani`s financial position, changes in
equity, results of operations or cash flow and have been prepared in a manner
consistent with the format and accounting policies adopted by the company.
Notes Before the After the Change
acquisition Acquisition
(cents) (cents) (%)
Fully diluted 1,2,3,5 21.6 21.7 0.5
earnings per share
Fully diluted 1,2,3,5 21.6 21.7 0.5
headline earnings
per share
Net asset value per 1,2,4,6 67.7 69.7 3.0
share
Net tangible asset 1,2,4,6 66.6 61.7 (7.4)
value per share
Fully diluted 1 177 000 000 1 255 750 000
weighted average
number of shares in
issue
Notes:
1. The "Before the acquisition" column has been extracted from the forecast
income statement of Vunani for the year ending 31 December 2008 and the
reviewed balance sheet for the year ended 31 December 2007.
2. The "After the acquisition" column reflects the financial effects of the
acquisition on Vunani.
3. The effects on earnings per share and headline earnings per share are
calculated based on the assumption that the acquisition was effected on 1
January 2008.
4. The effects of net asset value per share and net tangible asset value per
share are calculated based on the assumption that the acquisition was
effected on 31 December 2007.
5. Fully diluted earnings and fully diluted headline earnings per share
effects are based on the following assumptions and information:
- R12 million of the purchase price was settled from existing cash on
hand; and
- the total after tax profit attributable to the acquisition is R19.5
million for the year ending 31 December 2008.
6. Net asset value and tangible net asset value per share effects are based on
the following assumptions and information:
- a portion of the purchase price was paid on 31 December 2007 in the
manner described in note 5; and
- 57 250 000 shares were issued at R1.00 per share on 31 December 2007.
7. The revaluations and allocations that may arise from the application of
IFRS 3 (Business Combinations) have not been made as this will only be
finalised in due course. The pro forma financial information has thus been
prepared on the basis that the excess of the purchase price over the net
asset value of the Corporate Solutions assets will comprise goodwill of
R89.7 million. Goodwill is not amortised.
8. All adjustments will have a continuing effect on the company.
5. RATIONALE OF THE TRANSACTION
The rationale for the acquisition is, inter alia, as follows:
- it will provide Vunani with the opportunity to strengthen and grow its
income base from its financial services operations;
- it will provide Vunani with the opportunity to provide comprehensive
corporate finance services, such as capital raisings, listings on JSE Main
Board and AltX, mergers and acquisitions, BEE transactions, corporate
finance transactions, debt financing and private equity to its current and
future clients;
- it will provide Vunani with the opportunity to provide comprehensive
treasury services, such as money market trading, cash management, foreign
exchange transactions and property consulting to its current and future
clients; and
- Vunani will be provided with the opportunity to generate further deal flow
and cross-selling to its existing business divisions.
Vunani`s platform as the leading BEE financial services group will provide
excellent opportunities to Vunani Corporate Finance and Vunani Treasury to
access new business opportunities.
6. RENEWAL OF CAUTIONARY
Further to the cautionary announcement dated 22 February 2008, shareholders are
advised that the 51% acquisition of Retirement Fund Solutions Holdings
(Proprietary) Limited by Vunani may have a material effect on the price at which
Vunani`s shares trade. Accordingly, shareholders are advised to continue to
exercise caution when trading in Vunani shares on the JSE until a further
announcement is made.
Johannesburg
14 April 2008
Joint Designated Advisers
Merchant Sponsors (Proprietary) Limited
Vunani Corporate Finance
Auditors and reporting accountants
Deloitte & Touche
Date: 14/04/2008 17:53:40 Produced by the JSE SENS Department.
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