| Wed 1 Jul 2009, 17:08 | | IFH - IFA Hotels & Resorts Limited - Announcement regarding the acquisition |
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IFH
IFH
IFH - IFA Hotels & Resorts Limited - Announcement regarding the acquisition,
small related party transaction and further cautionary announcement
IFA Hotels & Resorts Limited
(Incorporated in the Republic of South Africa)
(Registration number 1919/001318/06)
Share code: IFH
ISIN: ZAE000075669
("IFA" or "the company")
Announcement regarding the acquisition by IFA of additional shares in Boschendal
(Proprietary) Limited and Purple Plum Properties 59 (Proprietary) Limited (both
hereinafter referred to as "Boschendal"), Small Related Party Transaction and
Further Cautionary Announcement
1. Introduction
Further to the cautionary announcement dated 10 June 2009, IFA is pleased to
announce that an agreement has been reached between Citation Holdings S.A ("the
Vendor"), and IFA Boschendal Investments (Pty) Limited ("IFA Boschendal"), a
wholly owned subsidiary of IFA relating to the acquisition by IFA Boschendal of
an additional 5,25% of the issued shares ("the Shares and Ancillary rights") in
Boschendal and an effective 5,25% in Purple Plum Properties 59 (Pty) Limited
("Purple Plum") (all inclusive "the Acquisition"). Purple Plum is a dormant
company in the process of being deregistered.
2. Details of the Acquisition
2.1 The Vendor
The Vendor is duly incorporated in accordance with the laws of Luxembourg.
2.2 The business
Boschendal has development plans for the 2 240 hectare Boschendal estate, which
includes 19 Founder Estates, an upmarket retirement village with 400 individual
units, 500 residential stands and a 120 room boutique hotel. There will also be
a mixed-use development of 100 residential apartments, retail and office
premises. The required regulatory approvals are in place for the development of
the 19 Founder`s Estates.
2.3 The purchase consideration
The total purchase consideration in respect of the Acquisition amounts to R9.6
million, (excluding Value Added Tax), which is payable by IFA by way of
arranging the transfer to the vendor of properties known as Fairmont Condo Units
211 and 215 in the Fairmont Zimbali Hotel and Resort, subject to a Standard
Compulsory Rental Pool agreement. The price of these units reflects fair value
in line with current selling prices of similar units in the development. The
terms of the transaction contains certain special provisions being a 10%
guaranteed return on the value (excluding Value Added Tax) after the deduction
of monthly levies and assessment fees together with a guaranteed buy-back after
5 years from date of purchase for an amount of R10.56 million (excluding Value
Added Tax).
2.4 The effective date
The effective date of the Acquisition is the date of transfer of the Shares and
Ancillary rights to IFA. The Acquisition agreement was signed on the 9th June
2009 following a special shareholders` meeting. The necessary cautionary
announcement was published the following day and the parties have subsequently
considered various minor amendments which may, if agreed, be incorporated in an
addendum to the Acquisition agreement.
3. Rationale for the Acquisition
The rationale for acquiring the Shares and Ancillary rights which results in
the restructure of the shareholding of Boschendal which sees IFA owning 37,33%
and the remaining 62,67% being held by JCI Limited ("JCI")as a result of their
settlement with all other shareholders, which is subject to the normal
regulatory approvals and procedures.
The restructure means that IFA and JCI will jointly assume control over
Boschendal with both parties committed to creating a development which IFA
believes will complement their internationally recognised portfolio of top
quality integrated resorts.
4. Special conditions
The transaction requires the following approvals:
4.1 South African Reserve Bank; and
4.2 Certain other applicable regulatory approvals.
5. Pro forma financial effects
The table below sets out the unaudited pro forma financial effects of the
Acquisition based on the assumption that the Acquisition took place with effect
from 1 July 2008 for income statement purposes and on 31 December 2008 for
balance sheet purposes.
The unaudited pro forma financial effects are presented for illustrative
purposes only and, because of their nature, may not give a fair reflection of
IFA`s financial position or results of operations after the Acquisition has been
implemented. The unaudited pro forma financial effects are the responsibility of
the directors of IFA.
Before the After the % change
Acquisition1 Acquisition2
Earnings per share (7.02) (9.06) (29)%
(cents)
Headline earnings per (7.1) (9.14) (29)%
share (cents)
Net asset value ("NAV") 77.28 75.07 (3)%
per share (cents)
Net tangible asset 76.23 74.01 (3)%
value ("NTAV") per
share (cents)
Weighted average shares 218,210,680 218,210,680 0%
in issue for the period
Shares in issue at the 218,210,680 218,210,680 0%
end of the period
Notes:
1 The figures in this column are extracted from the audited results of the
company for 6 months ended 31 December 2008.
2 The figures in this column are based on the figures set out in the previous
column after the implementation of the Acquisition. For purposes of the
earnings and headline earnings per share it was assumed that the
Acquisition had been in effect for the 6 months ended 31 December 2008 and,
for purposes of net asset value and net tangible asset value per share,
that it had been implemented on 31 December 2008.
3 Share of losses of the associate is accounted for until the carrying value
of the investment reaches NIL in terms of IAS 28. The carrying value of the
investment prior to the implementation of the transaction as at 31 December
2008 was R28.6 million. The net effect on the carrying value of the
investment of R5.1 million is due to an increase in the investment of R9.6
million as a result of the Acquisition of the Shares and Ancillary rights
and a decrease as a result of an increased share of losses of R4.5 million.
6. Small Related Party Transaction
6.1 The Related Party
The related party as defined in Section 10 of the JSE Limited Listings Required
is IFA Fair-Zim Hotel & Resort (Pty) Ltd ("IFA-Fair Zim"), a wholly owned
subsidiary of IFA Hotels & Resorts KSCC (IFA HR), who holds 85% of the issued
capital of IFA.
6.2 The transaction
The related party transaction is the loan by IFA Fair Zim to IFA Boschendal of
the sum of R9.6 million to facilitate the transfer of the properties referred to
in paragraph 2.3 above. The loan will bear interest at the Nedbank prime lending
rate from time to time and has no fixed terms of repayment.
6.3 Fairness opinion
An independent advisor has been appointed and will advise shareholders in due
course as to whether the Transaction is fair to IFA shareholders other than IFA
HR.
6.4 Pro Forma financial effects
The Acquisition and related party transaction is one indivisible transaction and
the financial effects is reflected in paragraph 4 above.
7. Further Cautionary Announcement
Further to paragraph 2.4 above, shareholders are advised to exercise caution
when dealing in the company`s securities until a full or further announcement is
made.
Zimbali
1 July 2009
Sponsor
QuestCo Sponsors (Proprietary) Limited
Attorneys
Larson Falconer Incorporated
Date: 01/07/2009 17:08:01 Produced by the JSE SENS Department.
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