| Wed 10 Jun 2009, 15:04 | | BSR - Basil Read Holdings - Acquisition Of A Construction Group And Renewal Of |
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BSR
BSR
BSR - Basil Read Holdings - Acquisition Of A Construction Group And Renewal 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 A CONSTRUCTION GROUP
RENEWAL 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 (Proprietary) Limited, has reached agreement
with the shareholders of Mvela Phanda Construction (Proprietary) Limited,
Contract Plumbing and Sanitation (Proprietary) Limited and P. Gerolemou
Construction (Proprietary) Limited ("the Group"), to acquire all the shares in
and claims of the Group for a consideration of R345,5 million ("the
consideration") (collectively, "the acquisitions").
The vendors are PA Gerolemou, MS Aziz Joosub, ED Cave, TFM Schrama, DI Boyes, P
Gerolemou Family Holdings (Proprietary) Limited, Saleem Joosub Family Trust, TS
Mahlangu, MRR Mabitsi, FN Msimang, MF Makena, N Bhima, S Ndlovu, M Kruger, S van
Niekerk and SS Khan.
The effective date of the acquisitions is the seventh business day following the
date on which all the conditions precedent (set out in paragraph 4 below) are
fulfilled ("effective date").
2. Settlement of the consideration
The consideration of R345,5 million will be settled as follows:
1. Guaranteed portion of consideration - R300,2 million to be settled as
follows:
- An initial cash payment of R240,0 million payable on the effective
date;
- A payment of R31,4 million on 1 July 2010; and
- A payment of R28,8 million on 1 July 2011.
2. Contingent consideration - R45,3 million to be settled as follows:
- A payment of R23,6 million on 1 July 2010; and
- A payment of R21,7 million on 1 July 2011.
the contingent consideration is subject to the Group meeting profit
targets, over the next 18 months, which have been set based on the
current order book.
All deferred payments mentioned above will attract interest at 9% per annum
amounting to a total interest charge not exceeding R14,5 million over the
period.
The acquisitions will be settled in cash and funded by the raising of R240
million of debt through a R1 billion Basil Read Holdings Limited Medium Term
Note programme listed on the Bond Exchange of South Africa.
3. Description of the companies and rationale for the acquisition
The Group, which has been in business for 28 years, operates out of its
headquarters in Pretoria and encompass all facets of the building industry. More
recently the Group has gained valuable experience in the construction of
hospitals and prisons and has expanded into the civil engineering arena. The
Group currently has an order book amounting to R1,5 billion for the next 18
months. The Group is cash generative and is debt free.
Key management have signed three year service and confidentiality agreements
including restraint undertakings.
The acquisitions will compliment Basil Read`s own building division. They will
add to Basil Read`s order book as well as add additional resources and
management skills.
The Group`s business, being of a similar size to Basil Read`s building division,
will represent an earnings enhancement for Basil Read and represents a step
forward in Basil Read`s stated intention of growing by acquisition as well as
organically.
Basil Read`s current order book, excluding the R1,5 billion order book of the
Group, amounts to R6,1 billion.
4. Conditions precedent
The acquisitions are subject to conditions that are considered normal for
transactions of this nature, of which the following remain outstanding:
- the completion of a formal financial and legal due diligence investigation
of the Group;
- the requisite regulatory compliance and approval to the extent necessary,
including Competition Authority and the JSE Limited; and
- approval by the requisite number of Basil Read shareholders in general
meeting.
5. Categorisation of the acquisition
The acquisitions are categorised as a Category 1 transaction in terms of the JSE
Limited Listings Requirements.
6. Renewal of cautionary announcement
Shareholders are referred to the cautionary announcement released on SENS on 15
May 2009 advising that the company had entered into negotiations. Shareholders
are advised to continue exercising caution when dealing in the company`s
securities until an announcement containing financial effects of the
acquisitions is released.
Johannesburg
10 June 2009
Sponsor: Sasfin Capital
(A division of Sasfin Bank Limited)
Date: 10/06/2009 15:04:01 Produced by the JSE SENS Department.
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