| Mon 26 May 2008, 16:57 | | BSR - Basil Read - Acquisition Of The Businesses Of Roadcrete Africa (Pty) |
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BSR
BSR
BSR - Basil Read - Acquisition Of The Businesses Of Roadcrete Africa (Pty)
Limited And Withdrawal Of Cautionary Announcement
BASIL READ HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1984/007758/06
Share Code: BSR & ISIN: ZAE000029781
("Basil Read" or "the company")
ACQUISITION OF THE BUSINESSES OF ROADCRETE AFRICA (PTY) LIMITED AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction and terms
The board of Basil Read is pleased to announce that the company, through its
wholly owned subsidiary Basil Read (Pty) Ltd, has reached agreement with
Roadcrete Africa (Proprietary) Limited ("the vendor") to acquire all the shares
in and claims on loan account against all the subsidiaries of the vendor ("the
businesses") for a consideration of R157.8 million ("the consideration")
(collectively, "the acquisition"). The acquisition includes the exclusive right
to the proprietary name "Roadcrete Africa" and any derivative thereof available
to the vendor.
The effective date of the acquisition is the first day of the calendar month
following the date on which all the conditions precedent (set out in paragraph 5
below) are fulfilled ("effective date").
2. Settlement of the consideration
The consideration of R157.8 million will be settled as follows:
- An initial cash payment of R77.2 million payable on the effective date;
- A payment of R47.5 million via the issue of Basil Read Holdings Limited
shares, at the 30 day volume weighted average price per share, to the
shareholders of the vendor on the effective date; and
- The balance will be payable in three installments as follows:
- R11.9 million 1 year after the effective date of the transaction.
- R11.1 million 2 years after the effective date of the transaction.
- R10.1 million 3 years after the effective date of the transaction.
- The executives of the vendor will also receive a performance bonus in terms
of performance contracts covering the next three years.
The initial cash payment will be funded by debt financing of R70 million and the
balance from available cash.
The majority of the shares to be issued are being issued to the Black Economic
Empowerment ("BEE") partners of the vendor.
3. Description of the businesses and rationale for the acquisition
The vendor`s core business is the provision of road building and civil
engineering services for clients including private developers, the South African
National Road Agency Limited, construction contractors and provincial
governments. Since this business is identical to Basil Read`s roads and civils
operating division, synergies exist which will enhance the competitiveness and
profitability of the roads and civils division.
The vendor`s current order book amounts to R850 million and the vendor is a 20%
joint venture partner with Basil Read on the recently awarded Gauteng Freeway
Improvement contract in the amount of R1.7 billion.
All other contract work for the vendors other clients will carry on in the
normal course of business.
The vendor`s business is profitable, represents an earnings enhancement for
Basil Read and is a step forward in the company`s stated intention of growing by
acquisition as well as organically.
4. Financial effects
The unaudited pro forma financial effects of the acquisition, based on the
published audited results of Basil Read for the period ended 31 December 2007
are set out below. The unaudited pro forma financial effects have been prepared
for illustrative purposes only to provide information on how the acquisition may
have impacted on the results and financial position of Basil Read. Preparation
of the unaudited pro forma financial effects is the responsibility of the
directors. Because of their nature, the pro forma financial effects may not
fairly present Basil Read`s financial position after the acquisition or the
effect on future earnings:
After the
Before the acquisition
acquisition - pro forma %
change
Earnings (cents per share) 159.18 169.14 6.26
Headline earnings (cents per 158.54 168.51 6.29
share)
Net asset value (cents per 473.52 525.35 10.95
share)
Net tangible asset value (cents 418.63 335.12 (19.95)
per share)
Average and weighted average 73 995 75 578 2.14
number of shares in issue
(R`000)
Number of shares in issue 75 588 77 171 2.09
(R`000)
Notes and assumptions:
(1) The figures in the "Before" column are extracted from Basil Read`s
published audited results for the year ended 31 December 2007.
(2) Earnings and headline earnings figures in the "After" column are based on
the assumption that the acquisition took place on 1 January 2007, after
taking into account the following adjustments:
- 1 583 317 shares at R30,00 per share were issued in part payment for
the acquisition on 1 January 2007;
- audited financial results of the vendor for the 12 months ended 31
August 2007;
- an average interest rate of 9% per annum was applied on the cash
portion of the consideration and an average interest rate of 13% was
applied on the financed portion; and
- a company tax rate of 28%.
(3) The net asset value and net tangible asset value figures in the "After"
column are based on the assumption that the acquisition took place on 31
December 2007 and that an assumed share price of R30,00 per share was used to
calculate the portion of the purchase consideration settled by the issue of 1
583 317 Basil Read Holdings Limited shares.
5. Conditions precedent
The acquisition is subject to conditions that are considered normal for a
transaction of this nature, of which the following remain outstanding:
- the completion of a formal financial and legal due diligence investigation
of the vendor`s subsidiaries;
- the conclusion of all contractual agreements relating to the acquisition;
and
- the requisite regulatory compliance and approval to the extent necessary.
6. Categorisation of the acquisition
The acquisition is categorised as a Category 2 transaction in terms of the JSE
Limited Listings Requirements. The company will amend the articles of the vendor
to conform to schedule 10 of the JSE Limited Listing Requirements.
7. Withdrawal of cautionary announcement
Shareholders are referred to the cautionary announcement published on SENS on 12
May 2008. By virtue of the conclusion of the acquisition on the terms referred
to in this announcement, caution is no longer required to be exercised by
shareholders when dealing in their securities.
Johannesburg
26 May 2008
Sponsor: Sasfin Capital
(A division of Sasfin Bank Limited)
Date: 26/05/2008 16:57:20 Produced by the JSE SENS Department.
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