| Thu 3 Jul 2008, 10:18 | | TAS - Taste Holdings - Amendments To The NWJ Holdings (Pty) Limited ("NWJ") |
|
TAS
TAS
TAS - Taste Holdings - Amendments To The NWJ Holdings (Pty) Limited ("NWJ")
Acquisition Agreement And Updated Financial Effects
TASTE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2000/002239/06)
JSE code: TAS
ISIN: ZAE000081162
("Taste" or "the company")
AMENDMENTS TO THE NWJ HOLDINGS (PTY) LIMITED ("NWJ") ACQUISITION AGREEMENT AND
UPDATED FINANCIAL EFFECTS
1. Introduction
Shareholders are referred to the announcement, dated 8 April 2008, relating
to the acquisition of NWJ ("the transaction") and are advised that Taste
and The Hylton Rabinowitz Family Trust and the D Buxton Family Trust ("NWJ
Sellers") agreed to certain amendments to the original transaction.
2. Amendments to the transaction
Taste and the NWJ Sellers ("the parties") have agreed to reduce the
multiple utilised in the calculation of the purchase price such that the
purchase price payable by Taste is adjusted from R120 million to R101.5
million.
In addition the NWJ Sellers will increase their equity participation in
Taste, from the original R13.5 million, issued in Taste ordinary shares at
65 cents per share, to R25.9 million, issued in Taste ordinary shares at 62
cents per share, which is a reflection of the NWJ Sellers` ongoing
commitment to Taste.
3. Rationale for amendment of purchase price
The agreement was reached between the parties in light of the prevailing
market conditions. The reduction in the purchase price coupled with an
increased equity participation by the NWJ Sellers will enable lower
borrowings for the combined group and will ensure that no further equity
capital raisings are required to fund the transaction. This agreement was
reached despite the fact that NWJ achieved its profit forecast with audited
group profit after tax of R19.4 million for the year ended 30 April 2008.
4. Discharge of the purchase price
The purchase price shall be discharged as follows:
- R25.9 million as soon as possible after the effective date in Taste
ordinary shares at 62 cents per share (i.e. 41 774 194 shares) ("the
consideration shares");
- an amount of R65.6 million in cash on the effective date; and
- a deferred amount of R10 million which will be potentially released over a
two year period at six monthly intervals in accordance with the sale
agreement, based on certain stock warranties being met.
5. Unaudited pro forma financial effects:
The amended unaudited pro forma financial effects set out below are
provided for illustrative purposes only in order to assist Taste
shareholders to assess the impact of the transaction on the earnings,
diluted earnings, headline earnings, diluted headline earnings, net asset
value and net tangible asset value per share of Taste. These unaudited pro
forma financial effects have been disclosed in terms of the Listings
Requirements and because of their nature may not give a fair presentation
of Taste`s results and financial position after the transaction. The
unaudited pro forma financial effects are the responsibility of the
directors of Taste and are presented in a manner consistent with the
accounting policies adopted by Taste.
Notes Audited Unaudited % Change
Before the pro forma
transaction after the
transaction
Earnings per share 2 8.0 13.4 67.5
(cents)
Diluted earnings per
share (cents) 2 8.0 13.4 67.5
Headline earnings
per share (cents) 2 8.0 13.7 71.3
Diluted headline
earnings per share 2 8.0 13.7 71.3
(cents)
Net asset value per 3 35.9 38.3 6.7
share (cents)
Net tangible asset
value per share 3 23.0 2.6 -88.7
(cents)
Weighted average
number of shares in 125 000 170 161
issue (000)
Fully diluted
weighted average 125 000 170 161
number of shares in
issue (000)
Shares in issue at
period end (000) 125 000 170 161
Notes:
1. The earnings, diluted earnings, headline earnings, diluted headline
earnings, net asset value and net tangible asset value per share, as set
out in the "Before the transaction" column, are extracted from Taste`s
audited results for the year ended 29 February 2008.
2. Earnings, headline earnings, diluted earnings and diluted headline earnings
per share effects, as set out in the "Unaudited pro forma after the
transaction" column are based on the following assumptions and information:
- the transaction was effective 1 March 2007;
- the purchase price was settled on 1 March 2007 by way of the issue of 41
774 194 Taste ordinary shares at R0.62 per share, a cash payment of R65.6
million to the sellers, which cash payment was financed through existing
cash on hand of R21.1 million and borrowings of R44.5 million incurring
interest at 15.2% per annum (pre tax), and a deferred portion of R10
million relating to the stock warranty attracting interest at 9% per annum
and paid to the NWJ Sellers over a two year period at six monthly
intervals;
- the estimated transaction costs of R7.6 million have been accounted for
against share premium and were paid on 1 March 2007 by way of an issue of 3
387 097 Taste ordinary shares at R0.62 per share and a cash payment of R5.5
million, which cash payment was financed through additional borrowings
incurring interest at 15.2% per annum (pre tax); and
- the total after tax profit attributable to the NWJ group is R19.4 million
and headline earnings is R20.1 million for the year ended 30 April 2008 as
per the audited financial statements.
3. Net asset value and net tangible asset value effects, as set out in the
"Unaudited pro forma after the transaction" column are based on the
following assumptions and information:
- the transaction was effective 29 February 2008;
- the purchase price was settled on 29 February 2008 in the manner described
in note 2 above;
- estimated transaction costs of R7.6 million were paid on 29 February 2008
in the manner described in note 2 above and have been accounted for against
share premium; and
- 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 effective purchase price over
the net asset value of the NWJ group of R56.8 million will comprise
goodwill of R44.6 million, which goodwill is not amortised.
6. Circular to shareholders
Subject to JSE approval, a circular to shareholders, including revised
listing particulars and a notice of a shareholders` general meeting, will
be circulated to shareholders in due course. Shareholders will be notified
once the transaction becomes unconditional.
JOHANNESBURG
3 July 2008
Designated Adviser
Vunani Corporate Finance
Date: 03/07/2008 10:18:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
