| Tue 27 May 2008, 16:26 | | STA - StratCorp - Acquisition And Withdrawal Of Cautionary Announcement |
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STA
STA
STA - StratCorp - Acquisition And Withdrawal Of Cautionary Announcement
STRATCORP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2000/031842/06)
JSE code: STA
ISIN: ZAE000034294
("StratCorp" or "the Company")
ACQUISITION BY STRATCORP OF THE ENTIRE ISSUED SHARE CAPITAL OF XPRESS HOLDINGS
PROPRIETARY LIMITED ("XPRESS") AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the cautionary announcement, dated 23 April 2008, shareholders
are advised that StratCorp has entered into an agreement with the
shareholders of Xpress("the Shareholders"), dated 26 May 2008, ("the
agreement"), in terms of which StratCorp will acquire the entire issued
share capital of Xpress ("the transaction").
2. BACKGROUND INFORMATION
Xpress is involved in the asset finance industry. The company was formed in
2007 by experienced partners involved in the asset finance industry. Its
business is to broker asset rental finance agreements between suppliers and
businesses or members of the public.
3. RATIONALE FOR THE TRANSACTION
StratCorp has recently announced the formation of an asset finance
division. This acquisition will assist StratCorp in accelerating the growth
of this division.
4. PURCHASE CONSIDERATION AND PROFIT WARRANTY
Purchase consideration:
Subject to the profit warranty and the conditions precedent as set out
below, the total purchase consideration is R6 114 551, which amount is to
be settled by the issue of 6 114 551 StratCorp shares at the lowest of 100
cents per share or the 30 day weighted average price per share following
the completion of the audit of the profit warranty.
Profit warranty:
The Shareholders warrant that a minimum profit after tax of R5 000 000 for
the 12 months ending 30 June 2009 will be achieved by Xpress.
The purchase consideration as set out above will be adjusted as follows:
Should the actual net profit after tax for the period ending 30 June 2009
be 20% or more of than the warranted pre-tax profit for the period, then
the purchase price will be adjusted upwards by R2 500 000;
- Should the actual net profit after tax (at 28%) be less than the
warranted profit, then the purchase price will be adjusted downwards
by a factor of 2.5 times of the difference between the actual net
profit after tax at 30 June 2009 and the warranted net profit after
tax for the same period;
- Any difference resulting from the above calculations will be dealt
with as follows and in that particular order:
- the consideration payable in StratCorp shares will be adjusted,
thereafter, to the extent that there is no consideration payable
in StratCorp shares, the repayable portion of the overdraft
account of Xpress will be adjusted; and
- thereafter, to the extent that none of the above remain, the
repayable portion of the shareholder loan accounts will be
adjusted on a pro rata basis;
- to the extent that all of the above three options have been
exhausted, surety is provided for a total amount not exceeding R2
500 000.
5. EFFECTIVE DATE
The transaction will become effective on 1 March 2008 subject to the
successful fulfilment of the conditions precedent set out in paragraph 6
below.
6. CONDITIONS PRECEDENT
The transaction is conditional, inter alia, upon:
- The signing of at least 3 year service contracts and 1 year restraint
of trade contracts by all key staff members of Xpress;
- To the extent necessary, any regulatory approvals; and
- The cession of all contracts from certain Xpress subsidiaries to
Xpress.
7. FINANCIAL EFFECTS
The unaudited pro forma financial effects, for which the directors are
responsible, are provided for illustrative purposes only to show the effect
of the transaction on earnings, headline earnings, diluted earnings and
diluted headline earnings per share as if the transaction had taken effect
on 1 March 2007 and on net asset value and net tangible asset value per
share as if the transaction had taken effect on 29 February 2008. Because
of their nature, the unaudited pro forma financial effects may not give a
fair presentation of the Group`s financial position and performance. The
unaudited pro forma financial effects have been compiled from the audited
consolidated financial statements for the year ended 29 February 2008 and
are presented in a manner consistent with the format and accounting
policies adopted by StratCorp and have been adjusted as described in the
notes below:
Movement
Audited Unaudited (cents) (%)
Before the After the
transaction transaction
Notes
Earnings 4 7.16 11.06 3.90 54
per share
(cents)
Headline 4 7.15 11.05 3.90 55
earnings
per share
(cents)
Diluted 4 7.16 11.06 3.90 54
earnings
per share
(cents)
Diluted 4 7.15 11.05 3.90 55
headline
earnings
per share
(cents)
Net asset 3&4 44.12 51.01 6.89 16
value per
share
(cents)
Net 3&4 39.60 41.71 2.11 5
tangible
asset value
per share
(cents)
Weighted 110 951 763 117 066 314 6 114 551 6
average
number of
shares in
issue
Fully 110 951 763 117 066 314 6 114 551 6
diluted
weighted
average
number of
shares in
issue
Shares in 116 021 132 122 135 683 6 114 551 5
issue at
year end
Notes:
1. The "Audited Before the transaction" column reflects the audited
results of StratCorp for the year ended 29 February 2008.
2. The "Unaudited Adjusted Before the transaction" column reflects what
the results would have been had the transaction been effective for the
full financial year.
3. Net asset and tangible net asset value calculations were completed
assuming the transaction was concluded at the balance sheet date of 29
February 2008.
4. The pro forma financial effects in the "Unaudited After the
transaction" column are based on the following assumptions:
- 6 114 551 ordinary shares were issued on 1 March 2007 to the
Shareholders for a total value of R6 114 551.
- The transaction costs are estimated to be approximately R50 000
and have been included in the calculation of the net asset value
and tangible net asset value as these costs are to be capitalised
as part of the purchase consideration.
8. DETAILS OF THE VENDORS
The vendors of Xpress are its shareholders, namely JS Coetzee, EP Whittle
and CE Whittle.
9. CLASSIFICATION OF THE TRANSACTION
The transaction is classified as a Category 2 transaction in terms of the
Listing Requirements of the JSE Limited.
10. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
The cautionary announcement is hereby withdrawn.
Johannesburg
27 May 2008
Designated Adviser
Vunani Corporate Finance
Date: 27/05/2008 16:26:01 Produced by the JSE SENS Department.
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