| Fri 12 Sep 2008, 13:49 | | 1TM - 1time Holdings - Acquisition And Withdrawal Of Cautionary Announcements |
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1TM
1TM
1TM - 1time Holdings - Acquisition And Withdrawal Of Cautionary Announcements
1time Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1999/017536/06)
(JSE code: 1TM ISIN: ZAE000102026)
("1time" or "the company")
ACQUISITION OF A 77.5% INTEREST IN SAFAIR TECHNICAL (PTY) LIMITED AND WITHDRAWAL
OF CAUTIONARY ANNOUNCEMENTS
1. INTRODUCTION
Shareholders are referred to the cautionary announcements issued on 22 July 2008
and 3 September 2008.
1time has entered into an agreement ("the agreement") with Aergo SA Three
Limited ("Aergo"), a wholly owned subsidiary of Irish based Aergo Capital
Limited, in respect of the acquisition of a 77.5% interest in Aergo`s wholly
owned subsidiary Safair Technical (Pty) Limited ("Safair Technical") ("the
acquisition"). The remaining 22.5% will be retained by Aergo.
In terms of the Listings Requirements of the JSE Limited ("JSE") the acquisition
is classified as a category 1 transaction based on the maximum possible total
purchase consideration payable.
2. THE ACQUISITION
2.1. RATIONALE FOR THE ACQUISITION
1time is a diversified aviation group with the following focus areas: an
airline, an aircraft maintenance business and a charter business.
Aeronexus Technical, a wholly owned subsidiary of 1time, provides a
comprehensive aircraft maintenance service for 1time Airline`s fleet as well as
several other South African and African operators. Aeronexus Technical is
currently operating at full capacity with a two bay hanger facility at O.R.
Tambo International Airport. It has developed a market niche for its narrow body
jet target market with competitive pricing (in US dollars) and quality
maintenance work.
Safair Operations and Safair Technical have been in the aviation business since
1965 and were until recently wholly owned by Imperial Holdings Limited
(`Imperial`). Safair Technical houses the technical and aircraft maintenance
related business of Safair. Safair Technical has more than 300 staff and five
hangers at OR Tambo International Airport in Johannesburg as well as Cape Town
International Airport.
After the implementation of the acquisition, the businesses of Safair Technical
and Aeronexus Technical will be merged. The merger will create one of the
largest aircraft maintenance facilities in Africa approved by the United States
Federal Aviation Authority ("FAA"), European EASA, International Operations
Standards Association ("IOSA") and South African Civil Aviation Authority
("CAA"). After the acquisition the merged maintenance business will be the major
profit generator in the 1time group.
The merger will also ensure that the scarce skills of the highly experienced
employees of Safair Technical and Aeronexus Technical are retained in South
Africa.
2.2. DESCRIPTION OF THE BUSINESS OF SAFAIR TECHNICAL
Safair Technical hold FAA, EASA, IOSA and CAA approvals in respect of the
following aircraft types:
* Boeing 737-200 / 300 / 400 / 500;
* Lockheed Hercules L382 (L100-30);
* McDonnel Douglas 80 series aircraft; and
* Boeing 727.
Safair Technical owns all the necessary infrastructure, tooling and workshop
equipment for the repair and maintenance of these aircraft types and has access
to aircraft spares and logistical support.
The current major customers of Safair Technical include Safair Operations,
Imperial Air Cargo, SonAir, SAA Cargo and Interlink. Heavy maintenance, line
maintenance and maintenance support services are offered.
2.3. SALIENT TERMS AND CONDITIONS OF THE ACQUISITION
1time will purchase from Aergo 77.5% of the issued shares of Safair Technical,
which has a warranted net asset value of at least R50 million.
The purchase price will be USD 7.15 million to be settled as follows:
* USD 5.0 million will be paid on the effective date; and
* USD 2.15 million will be paid 12 months after the effective date.
Should the merged entity achieve an audited profit after tax of R50 million for
the financial year ending 31 December 2011, the purchaser will pay the seller an
additional USD 1.0 million.
The acquisition shall be subject to certain warranties from Aergo that are
customary in transactions of this nature.
The business of 1time`s subsidiary Aeronexus Technical will be merged with that
of Safair Technical as soon as practically possible, but no later than 6 months
after the signature date of the agreement. Aergo`s remaining 22.5% shareholding
in Safair Technical will then be converted into 22.5% shares in the merged
entity.
The acquisition will be effective from the first day of the calendar month that
follows the date on which all the conditions precedent have been met, with
completion expected by the end of the year.
The merged business will maintain 16 aircraft of Safair Operations and 12
aircraft of the 1time fleet as well as various other third party aircraft
worldwide. Aergo plans to significantly expand the business of Safair
Operations resulting in increased fleet maintenance requirements. In addition
Aergo has given certain undertakings in respect of the maintenance of its global
fleet at the facilities of Safair Technical for 3 years after the effective
date.
3. CONDITIONS PRECEDENT TO THE ACQUISITION
The acquisition will be conditional upon inter alia the following:
* Conclusion of the agreement between Imperial and Aergo relating to the
acquisition of the business of Safair Operations and Safair Technical from
Imperial;
* Approval of the acquisition by the Competition Commission;
* A Shareholders` Agreement in respect of Safair Technical being entered into
between 1time and Aergo;
* 1time securing funding for the purchase price;
* The conclusion of a maintenance service agreement between Safair Technical
and Safair Operations in respect of the Safair Operations fleet of
aircraft;
* Transfer of all relevant legal agreements and regulatory approvals from
Safair (Pty) Ltd to Safair Technical (Pty) Ltd and certain corporate and
shareholders approvals as required.
4. UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITION
The unaudited pro forma financial effects set out below are provided to
illustrate how the acquisition may have impacted on 1time`s results and
financial position. The pro forma financial effects have been prepared in
accordance with International Financial Reporting Standards. Due to the nature
of the unaudited pro forma financial information, it may not give a fair
presentation of the company`s results and financial position after the
acquisition. The unaudited pro forma financial effects are based on the reviewed
interim financial information of 1time for the six months ended 30 June 2008.
The directors of 1time are responsible for the preparation of the unaudited pro
forma financial effects.
Before the Pro forma after Change %
acquisition the
Reviewed acquisition
30-June-08 30-June-08
Earnings per share (cents) (3.01) 0.86 129%
Headline earnings per
share (cents) (3.01) 0.86 129%
Weighted average number
of shares in issue 210 000 000 210 000 000
Net asset value per
share (cents) 47.88 47.88 0%
Net tangible asset value
per share (cents) 46.91 37.45 (20)%
Number of shares in issue
at year end 210 000 000 210 000 000
Notes:
1 The "Before the acquisition" column has been extracted without adjustment
from the reviewed results of 1time for the six months ended 30 June 2008.
2 The "After the acquisition" earnings and headline earnings per share have
been based on Safair Technical`s management accounts for the six months
ended 30 June 2008 and assuming that USD 5 million of the purchase price
was fully funded by debt.
3 The earnings and headline earnings per share were calculated as if the
acquisition was effected on 1 January 2008.
4 The net asset value and net tangible asset value per share were calculated
as if the acquisition was effected on 30 June 2008.
5 Goodwill of R19.9 million will arise from the purchase price of USD 7.15
million excluding the additional purchase consideration of USD 1 million
for achieving the profit target.
5. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders no longer have to exercise caution when dealing in their
securities.
6. DOCUMENTATION
Further details of the acquisition will be included in a circular to ordinary
shareholders of 1time, which will, subject to the approval of the JSE, and will
be dispatched to 1time ordinary shareholders in due course.
Johannesburg
12 September 2008
Designated Adviser
Exchange Sponsors
Attorneys to the acquisition
Tugendhaft Wapnick Banchetti
Date: 12/09/2008 13:49:03 Produced by the JSE SENS Department.
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