| Wed 22 Jul 2009, 7:05 | | AFR - Afgri Limited - Disposal of Lowveld Branches to MGK Bedryfsmaatskappy |
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AFR
AFR
AFR - Afgri Limited - Disposal of Lowveld Branches to MGK Bedryfsmaatskappy
(Eiendoms) Beperk ("MGK")
AFGRI Limited
Registration Number: 1995/004030/06
(Incorporated in the Republic of South Africa)
ISIN: ZAE000040549
JSE share code: AFR
("AFGRI" or "the Company")
DISPOSAL OF LOWVELD BRANCHES TO MGK BEDRYFSMAATSKAPPY (EIENDOMS) BEPERK ("MGK")
1. INTRODUCTION
Shareholders are advised that AFGRI Operations Limited, ("AFGRI Operations") and
Laeveld Korporatiewe Beleggings Beperk ("LK"), both wholly owned subsidiaries of
AFGRI, have reached an agreement, which if it becomes unconditional according to
its terms, will see the disposal of 11 retail branches in the Lowveld area to
MGK ("the Transaction").
2. THE TRANSACTION
Rationale
The retail branches currently supply agricultural related products and inputs to
farmers. The rationale for the Transaction is to dispose of the retail branches
situated in the non-grain producing geographic areas of AFGRI, in line with
AFGRI`s strategy to exit retail businesses which are not part of its identified
grain value chain or core business. AFGRI is assured that the management
philosophy adopted by MGK will be in the best interest of the farmers who remain
active in the geographic areas in which these retail stores are situated.
AFGRI`s remaining retail business will be aligned with the grain value chain.
The supply of AFGRI`s remaining products and services to the farmers within the
area covered by the Transaction will be unaffected by the Transaction.
Terms of the Transaction
AFGRI Operations and LK (collectively hereinafter referred to as "the Seller")
on 20 July 2009 (`the Signature Date") entered into a Sale of Business Agreement
("the Agreement") with MGK, in terms of which the Seller sold its retail outlets
at Brits, Thabazimbi, Vaalwater, Marble Hall, Groblersdal, Burgersfort,
Hoedspruit, Nelspruit, Barberton, Malelane and Komatipoort ("the AFGRI retail
branches") to MGK as going concerns.
The mechanisation division of the Seller and any mechanisation outlets were
specifically excluded from the Transaction, including but not limited to the
mechanisation outlets at Marble Hall and Malelane.
Purchase consideration
The purchase consideration payable by MGK to the Seller for the AFGRI retail
branches in terms of the Agreement is:
- R47 500 000 (forty seven million five hundred thousand rand); plus
- the value of the stock in trade which is approximately R62 500 000 (sixty
two million five hundred thousand rand) ("the Purchase Consideration").
The Purchase Consideration is payable as follows:
(a) on the date that all the conditions precedent in terms of the Agreement are
fulfilled ("the Effective Date"), R23 750 000.00 (twenty three million
seven hundred and fifty thousand Rand) is payable by MGK to the Seller;
(b) on the Effective Date a further R23 750 000.00 (twenty three million seven
hundred and fifty thousand Rand) is payable by MGK to the Seller, which
amount shall be paid into the trust account of the transfer attorneys of
the Seller, which attorneys shall release the amount pro rata to the Seller
against registration of the immovable property purchased by MGK from the
Seller in terms of the Transaction in the name of MGK; and
(c) no longer than 45 days after the Effective Date, 40% (forty percent) of the
value of the stock in trade and the balance thereafter in 4 monthly
instalments, each equal to 15% (fifteen percent) of the value of the stock
in trade.
Pro forma financial effects of the Transaction
The pro forma financial effects of the Transaction on AFGRI`s earnings per
share, headline earnings per share, net asset value per share and net tangible
asset value per share for the year ended 30 June 2009 are not significant (i.e.
are less than 3%), and have therefore not been disclosed.
The sale proceeds will be applied to reduce working capital in the AFGRI
Producer Services division.
3. CONDITIONS PRECEDENT
The implementation of the Transaction is subject to the fulfilment of the
following conditions precedent:
1. The approval of the Transaction by the respective Boards of AFGRI,
AFGRI Operations and LK; the AGRI Sizwe Empowerment Trust and certain
financiers of the Seller within 60 days of the Signature Date;
2. The approval of the Transaction by the Board of MGK within 15 days of
the Signature Date;
3. The unconditional approval of the Transaction by the Competition
Authorities within 120 days of the Signature Date;
4. MGK confirming that it is satisfied with the results of a due
diligence investigation in respect of the AFGRI retail branches within
30 days of the Signature Date;
5. MGK obtaining finance for the Transaction within 100 days of the
Signature Date;
6. The entering into by MGK and the Seller of agreements of sale; lease
agreements; sub-lease agreements and the cession of lease agreements,
as the case may be, in respect of the immovable properties that MGK
purchases from the Seller in terms of the Transaction within 30 days
of the Signature Date;
7. The obtaining by MGK of the required fuel licences from the Department
of Minerals and Energy in respect of the AFGRI retail branches within
90 days of the Signature Date;
8. The entering into by MGK and a subsidiary of the Seller of an
inventory supply agreement within 30 days of the Signature Date; and
9. The entering into by MGK and MKTV Tobacco Beperk of a lease agreement
in respect of the Groblersdal property within 30 days of the Signature
Date.
Centurion
22 July 2009
Merchant bank and sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 22/07/2009 07:05:08 Produced by the JSE SENS Department.
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