| Wed 25 Feb 2009, 8:54 | | BWK - Buildworks - Acquisition By Buildworks Of Consolidated Power Projects |
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BWK
BWK
BWK - Buildworks - Acquisition By Buildworks Of Consolidated Power Projects
(Proprietary) Limited ("CONCO"), General Issue Of Shares For Cash And
Withdrawal Of Cautionary Announcement
Buildworks Group Limited
(Previously Boomerang Trading 35 (Proprietary) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2007/004935/06)
Share Code: BWK & ISIN: ZAE000110219
("Buildworks" or "the Company")
ACQUISITION BY BUILDWORKS OF CONSOLIDATED POWER PROJECTS (PROPRIETARY) LIMITED
("CONCO"), GENERAL ISSUE OF SHARES FOR CASH AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
1. Introduction
Buildworks shareholders ("Shareholders") are referred to the Company`s
announcement released on SENS on 21 July 2008 and the circular to
Shareholders dated 20 October 2008 ("Circular") regarding the proposed
acquisition by Buildworks of the entire issued ordinary share capital in,
and shareholders claims against, CONCO (the "CONCO Acquisition").
Buildworks is pleased to announce that, pursuant to the conclusion of the
addendum to the CONCO acquisition agreement ("Acquisition Agreement")
referred to in paragraph 2 below ("Addendum") and the completion by the
Company of a successful capital raising, the outstanding condition
precedent to the Acquisition Agreement has been fulfilled and accordingly
the CONCO Acquisition has now been declared unconditional.
2. Addendum to the CONCO Acquisition
On 28 November 2008, Buildworks and the vendors of CONCO ("Vendors")
entered into the Addendum, in terms of which, inter alia, the cash portion
of the acquisition consideration payable to the Vendors by 28 February 2009
was reduced from R270,000,000 to R202,500,000 ("Cash Consideration"). The
adjustment to the Cash Consideration was concluded in order to reflect the
adverse change in the prevailing global macro economic and financial
landscape. The remaining terms of the CONCO Acquisition remained materially
unchanged.
3. Capital raising
In order to fund the Cash Consideration, the continued growth of CONCO and,
to the extent required, the payment of any earn-out warranties payable to
the Vendors in and around May 2010, the Company undertook a road show to
select strategic, local and international investors. Pursuant to the road
show the Company successfully placed and issued 316,410,287 new shares in
Buildworks ("Shares") at a price of 70 cents per Share ("Capital Raising
Shares"), of which 289,285,714 Shares were issued under the vendor
placement provisions and 27,124,573 Shares under the Company`s general
authority to issue shares for cash in accordance with the provisions
("General Issue Shares") of the Listings Requirements of the JSE Limited
("JSE").
On 19 February 2009 the Company and Pan-African Investment Partners II
Limited ("PAIP II"), by way of its wholly owned subsidiary PAIP II
(Buildworks) Limited (a Mauritian company limited by shares), entered into
a subscription agreement ("Subscription Agreement") in terms of which,
inter alia, PAIP II subscribed for 277,264,286 of the Capital Raising
Shares, representing 29.61% of the issued share capital of the Company, for
a total consideration of R194,085,000. In addition, PAIP II has, in terms
of the Subscription Agreement, secured an entitlement to subscribe, by no
later than 25 April 2009, for up to an additional 77,469,286 Shares at an
issue price of 70 cents per Share ("Additional Subscription") for a total
consideration of R54,228,500. Should PAIP II exercise their full
entitlement to the Additional Subscription, PAIP II will hold collectively,
up to 354,733,572 Shares representing not more than 34.99% of the issued
ordinary share capital of Buildworks post the Additional Subscription. The
Additional Subscription will be implemented under the general issue of
shares for cash provisions of the Listings Requirements of the JSE, for
which issue the Company has the requisite authority.
4. Pan-African Investment Partners II Limited
PAIP II is a USD 326 million private equity fund managed by Kingdom Zephyr
Africa Management ("Kingdom Zephyr"). Kingdom Zephyr is a leading private
equity fund manager in Africa. It was created in 2004 under the leadership
of Zephyr Management L.P., a New York investment firm with a focus on
emerging markets, and Kingdom Holding, the investment holding company
controlled by HRH Prince Alwaleed of Saudi Arabia, a leading philanthropist
and investor in Africa. Kingdom Zephyr manages two pan-African private
equity funds with over USD 450 million in committed capital, and has a
presence in Johannesburg, Accra, London and New York.
The strategic minority stake in Buildworks is PAIP II`s first investment in
South Africa and represents a vote of confidence from Kingdom Zephyr in the
country`s prospects, a long term commitment to the growing South African
and African infrastructure space, and a close partnership with the
Company`s management.
It is the intention of Buildworks and Kingdom Zephyr to leverage off their
respective expertise in order to expand the Company`s footprint on the
African continent, and to explore potential growth opportunities in the
Middle East.
5. Reconfiguration of the Buildworks board of directors
Under the terms of the Subscription Agreement, the board of directors of
the Company ("Board") has been limited to 11 members, of which three will
be PAIP II nominees ("PAIP II Representatives"). The PAIP II
Representatives are:
- Mr. Panos Voutyritsas: Partner at Kingdom Zephyr with 10 years of
private equity and investment banking experience in the United States,
Europe and Africa. Mr Voutyritsas has been with Kingdom Zephyr since
its inception in 2004 and completed a number of private equity
investments in Africa. He holds a Bachelor of Science degree in
Operations Research and Industrial Engineering from Cornell University
in New York;
- Mr. Nathan Mintah: Partner at Kingdom Zephyr with over 16 years of
investment banking and private equity experience in the US and Africa.
Mr Mintah was formally a Director in global investment banking with
HSBC. He holds a Bachelor of Science degree in Mathematics from Eckerd
College and an MBA from Yale University; and
- Mr. Andrea Geisser: Co-founder and former Managing Director of Fenway
Partners, a United States private equity firm with over USD 1 billion
under management. Mr Geisser has over 30 years of global investment
experience, and holds a PMD from Harvard University and a Bachelor of
Arts in Economics from Bocconi University in Milan.
In order to facilitate the appointment of the PAIP II Representatives and
achieve the appropriate composition of independent non-executive and
executive directors, Mr. Jannie Hooman has volunteered to step down from
the Board. Mr. Hooman has been an executive director of Buildworks and
Buildworks` subsidiary companies since the inception of the Company, during
which time he has managed, and continues to successfully manage, the
Company`s aggregate division. Whilst Mr. Hooman`s resignation is effective
from the date of the next Annual General Meeting of the Company, he will
remain a director of Drift Supersand Mining (Proprietary) Limited,
Buildworks` aggregate division, where he will continue to be instrumental
in the Company`s future.
6. Migration to the main board of the JSE
The Company is also pleased to announce that the JSE has approved the
migration of the listing of its Shares from the Altx to the Main Board of
the JSE, under the heavy construction sector of the JSE lists. It is
expected that the migration will take place during May 2009.
7. Financial effects resulting from the issue of the General Issue Shares and
the Additional Subscription
In accordance with the Listings Requirements of the JSE, the financial
effects of the issue of the General Issue Shares and the Additional
Subscription on the earnings, headline earnings, net asset value ("NAV")
and tangible net asset value ("TNAV") per Share are illustrated below. The
unaudited pro forma financial effects have been prepared to assist
Shareholders assess the impact on the earnings, headline earnings, NAV and
TNAV per Share for the financial year ended 31 August 2008. The pro forma
financial effects, as set out in the `After` column, have been prepared for
illustrative purposes only and because of their nature, may not fairly
present Buildworks` financial position for the financial year ended 31
August 2008.
It has been assumed for the purposes of the pro forma financial effects,
that the issue of the General Issue Shares and Additional Subscription took
place with effect from 1 September 2007 for income statement and 31 August
2008 for balance sheet purposes The directors of Buildworks are responsible
for the preparation of the financial effects which have not been reviewed
by the auditors.
Before After Change After Change
(cents)1, General (%) Addition (%)
3 Issue al
Shares Subscrip
(cents) 2,5 tion
(cents)
3,5
Earnings per Share 11.03 10.40 (5.75) 9.40 (14.78)
Headline earnings per 11.04 10.41 (5.68) 9.41 (14.76)
Share
NAV per Share 56.67 57.40 1.28 59.10 4.28
TNAV per Share 30.49 32.64 7.07 37.68 23.59
Number of Shares in 470,000 497,125 6.10 574,594 22.30
issue (000`s)
Weighted number of 444,575 471,699 5.77 549,169 22.30
Shares in issue
(000`s)
Notes:
1. The earnings and headline earnings per Share, as set out in the
`Before` column, are based on the latest audited annual financial
information of the Company for the twelve-month period ended 31 August
2008 ("Annual Results").
2. The earnings and headline earnings per Share, as set out in the `After
General Issue Shares` column, are based on the Annual Results and on
the assumptions that 27,124,573 General Issue Shares were in issue
from 1 September 2007.
3. The earnings and headline earnings per Share, as set out in the `After
Additional Subscription` column, are based on the Annual Results and
on the assumptions that 104,593,859 General Issue Shares and
Additional Subscription Shares were in issue from 1 September 2007.
4. The NAV and TNAV per share, as set out in the `Before` column, are
based on the Annual Results.
5. The `After General Issue Shares` column and the `After Additional
Subscription` column are based on the assumptions that:
5.1 R37,500,000 of the cash raised in terms of the Company`s general
authority has been utilised to fund the growth of CONCO;
5.2 R35,715,701 has been invested in an interest bearing account and
will be utilised to partially fund any potential earn-out
warranties payable to the Vendors in and around May 2010; and
5.3 Interest earned on the funds in terms of 5.2 above has been
calculated based on an interest rate of 10%.
8. Documentation and withdrawal of cautionary announcement
Shareholders are advised that the Subscription Agreement which, inter alia,
provides PAIP II with warranties standard for transactions of this nature,
will be available for inspection at the Company`s registered offices during
normal business hours from 25 February until 13 March 2009.
In addition, Shareholders are advised that the cautionary announcement
dated 19 January 2009 is hereby withdrawn and accordingly Shareholders are
no longer required to exercise caution when dealing in their Shares.
Sandton
25 February 2009
Investment Bank and Legal Advisors to Buildworks
Transactional Sponsor
[Investec Corporate Finance
logo] [ENS logo]
Designated Advisor to Buildworks Legal Advisors to PAIP II
[WWB logo]
[Java logo]
Date: 25/02/2009 08:54:01 Produced by the JSE SENS Department.
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