| Wed 12 Aug 2009, 10:36 | | CSP - Chemical Specialities - Signature of an Addendum to the Agreement Relating |
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CSP
CSP
CSP - Chemical Specialities - Signature of an Addendum to the Agreement Relating
to the Proposed Disposal by ChemSpec of Immovable Property and New
Operating Lease
Chemical Specialities Limited
Incorporated in the Republic of South Africa
Registration number: 2005/039947/06
Share code: CSP
ISIN code: ZAE000109427
("ChemSpec" or "the Company")
Signature of an Addendum to the Agreement Relating to the Proposed Disposal by
ChemSpec of Immovable Property and New Operating Lease
1. Introduction
Shareholders are referred to the Company`s detailed terms announcement of 4 May
2009 ("Terms Announcement") wherein it was disclosed that the Company had, on 23
February 2009, entered into an agreement with Zevoli 243 (Proprietary) Limited,
Registration number 2009/000997/07 ("the Purchaser") to dispose of the following
immovable property:
- Erven 105, 106, 108, 109 and 205 Canelands Extension 6, KwaZulu Natal
and Portion 1973 and Portion 2271 and the Remainder of Portion 1999 of
the Farm Cotton Lands No 1575, KwaZulu Natal, all held under Titled
Deed No. T23011/2008; and
- The Remaining Extent of Portion 1171 and the Remaining Extent of
Portion 1199 of the Farm Cotton Lands No. 1575, all held under Title
Deed No. T23012/2008,
in total measuring approximately 21,7292 hectares, together with all
improvements thereon, (collectively "the Canelands Property") but excluding
all plant and equipment specifically related to the production of paint,
agricultural chemicals and related activities which are the property of
ChemSpec or ChemSpec`s current tenant ("the Sale Agreement").
The Terms Announcement confirmed the purchase consideration payable to ChemSpec
in terms of the Sale Agreement in the sum of R130.0 million (excluding value
added taxation ("VAT") of R18.2 million), to be settled in cash. ("the Purchase
Consideration".)
2. Addendum to the Sale Agreement
Shareholders are advised that ChemSpec and the Purchaser have entered into an
addendum to the Sale Agreement, dated 3 August 2009, in terms of which:
- the Sale Agreement is resuscitated and reinstated in all respects,
following its inadvertent failure arising from the non-fulfilment of a
suspensive condition to the Sale Agreement. Namely, the Sale Agreement
required ChemSpec and the Purchaser to enter into an agreement of lease
("the Lease Agreement") in respect of the Canelands Property,
simultaneously with the signature of the Sale Agreement. The Lease
Agreement was not concluded simultaneously with the Sale Agreement, but
rather some six weeks later (details of the Lease Agreement have been
disclosed in the Terms Announcement); and
- the sum of R22,700,075, has been advanced by or on behalf of the Purchaser
to ChemSpec in part settlement of the Purchase Consideration ("the
Advance"). The remaining balance of the Purchase Consideration (namely,
R107,299,925, together with VAT thereon in the sum of R18,200,000), is to
be transferred to ChemSpec on registration of transfer of the Canelands
Property to the Purchaser ("the Transfer Date").
- The Advance is comprised as follows:
- The sum of R5 700 075, advanced to the Company by Dream Weaver
(Proprietary) Limited ("Dream Weaver", a related party to the
Company, as disclosed in the Terms Announcement and in the
circular referred to in paragraph 3 below). This amount accrues
interest at the prime lending rate plus 5% calculated from 23
February 2009 until the Transfer Date, which accrued interest is
payable by ChemSpec to Dream Weaver on the Transfer Date. The sum
of R5 700 075 shall be set off against the Purchase
Consideration; and
- The sum of R17,000,00, advanced to the Company by Corvest 6
(Proprietary) Limited ("Corvest 6", a related party to the
Company, as disclosed in the Terms Announcement and in the
circular referred to in paragraph 3 below). This amount accrues
interest at the prime lending rate plus 5% calculated from 23
February 2009 until the Transfer Date, which accrued interest is
payable by ChemSpec at the end of each and every successive
month. The sum of R17,000,000 shall be set off against the
Purchase Consideration.
- Should the disposal fail for any reason, ChemSpec shall immediately
repay to each of Dream Weaver and Corvest 6 the sums advanced together
with accrued interest thereon.
3. Unaudited pro forma financial effects of the transaction
The Terms Announcement disclosed the unaudited pro forma financial effects of
the disposal of the Canelands Property ("the Disposal") on ChemSpec on the basis
of the Company`s published interim results for the six months ended 30 September
2008.
The table below sets out the unaudited pro forma financial effects of the
Disposal on ChemSpec, on the basis of the Company`s published audited results
for the year ended 31 March 2009. The unaudited pro forma financial effects are
presented for illustrative purposes only and, because of their nature, may not
fairly present ChemSpec`s results or financial position after the Disposal. It
has been assumed for purposes of the unaudited pro forma financial effects that
the transaction took place with effect from 1 April 2008 for income statement
purposes and on 31 March 2009 for balance sheet purposes. The directors of
ChemSpec are responsible for the preparation of the unaudited pro forma
financial effects.
Per ChemSpec share Before the After the Percentage
transaction(1) transaction change
Basic earnings per 12.91 14.05(2) 8.83
share (cents)
Headline earnings per 8.05 8.99(2) 11.66
share (cents)
Net asset value (cents) 55.07 55.26(3) 0.36
Net tangible asset 43.43 43.63(3) 0.46
value (cents)
Weighted average number 306 932 306 932
of shares in issue
(`000)
Number of shares in 310 000 310 000
issue (`000)
Notes:
1. The "Before the transaction" basic earnings and headline earnings per
share have been extracted without adjustment from the published
audited results of ChemSpec for the year ended 31 March 2009. The
"Before the transaction" net asset value and net tangible asset value
per share have been calculated from the financial information
presented in the published audited results of ChemSpec for the year
ended 31 March 2009.
2. Basic earnings and headline earnings per share have been adjusted for
the following:
the profit on the disposal of the Canelands property amounting to
R1.2 million (based on an estimated value of the Canelands
property of R128.8 million at the date of sale calculated as the
value of the Canelands property as at 31 March 2009 of R120.0
million plus additional expenditure amounting to R8.8 million
incurred in respect of the Canelands property between 1 October
2008 and the date of signature of the disposal agreement) less
the transaction costs amounting to R0.6 million; and
It has been assumed that the proceeds on the sale of the
Canelands property will be utilised to settle the mortgage bond
of R98,652,460 and thereafter applied to working capital.
3. The net asset and net tangible asset values per share have been
adjusted for the following:
- the profit on the disposal of R1.2 million adjusted for capital
gains taxation at 14%;
- the transaction costs of R0.6 million adjusted for taxation at
28%;
- the reduction in non-current assets held for sale;
- the reduction in the mortgage bond over the Canelands property
and a portion of the bank overdraft;
- the deferred taxation liability in respect of the Canelands
property has been recognised as a current taxation liability
subsequent to the disposal; and
- VAT relating to the disposal has been realised as a current
liability.
4. Documentation and Notice of General Meeting
As confirmed in the Terms Announcement, a circular containing the information
required in terms of the JSE Listings Requirements pertaining to Category 1,
related party transactions and incorporating a notice of a ChemSpec
shareholders` general meeting to approve the transactions in terms of the Sale
Agreement and the Lease Agreement will be posted to ChemSpec shareholders in due
course.
Durban
12 August 2009
Date: 12/08/2009 10:36:02 Produced by the JSE SENS Department.
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