| Mon 1 Feb 2010, 13:30 | | AFR - AFGRI - Withdrawal Of Cautionary Announcement Relating To The Disposal Of |
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AFR
AFR
AFR - AFGRI - Withdrawal Of Cautionary Announcement Relating To The Disposal Of
The Business And Assets Of Tsunami Plant Protection (Pty) Ltd ("Tsunami Plant")
& Tsunami Crop Care (Pty) Ltd
AFGRI Limited
Registration Number: 1995/004030/06
(Incorporated in the Republic of South Africa)
ISIN: ZAE000040549
JSE share code: AFR
("AFGRI" or "the Company")
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT RELATING TO THE DISPOSAL OF THE BUSINESS
AND ASSETS OF TSUNAMI PLANT PROTECTION (PTY) LTD ("Tsunami Plant") & TSUNAMI
CROP CARE (PTY) LTD ("Tsunami Crop")(collectively "the Tsunami Companies" or
"the Seller") TO ONINAMIX (PTY) LTD trading as ARYSTA LIFESCIENCE SOUTH AFRICA
("Arysta " or "the Purchaser")
1. INTRODUCTION
Shareholders are referred to the cautionary announcement by AFGRI on 19 January
2010 regarding the disposal of the Tsunami Companies to Arysta. Shareholders
are advised that the Tsunami Companies and Arysta have concluded a definitive
sale agreement ("the Agreement") on 26 January 2010 which, if it becomes
unconditional according to its terms, will result in the disposal of the
business of Tsunami Crop and the assets of Tsunami Plant to Arysta ("the
Transaction").
2. THE TRANSACTION
Rationale
In re-aligning the AFGRI business to the grain value chain, AFGRI has embarked
on a process of exiting its non-core businesses. The businesses of the Tsunami
Companies form part of these non-core businesses.
Terms of the Transaction
In terms of the Transaction:
(i) Tsunami Crop sells its entire business as a going concern (other than
excluded assets and liabilities) to the Purchaser with effect from the closing
date of the transaction, which will occur after the date on which all the
conditions to the closing, as set out in paragraph 4 below ("Closing
Conditions"), have been satisfied ("Closing Date");
(ii) Tsunami Plant sells certain of its assets (i.e. selected assets not used in
its formulation plant) to the Purchaser with effect from the Closing Date, and
(iii) Tsunami Plant sells the formulation plant assets to the Purchaser with
effect from the date on which the conditions to the transfer of the formulation
plant ("Completion Conditions") have been satisfied.
Pending the satisfaction of the Completion Conditions Tsunami Plant has agreed
to toll manufacture for the Purchaser the products, which it currently
manufactures or for which it holds the registrations, for the Purchaser in terms
of a toll manufacturing agreement ("Toll Manufacturing Agreement").
Purchase consideration
The purchase consideration payable by Arysta to the Seller in terms of the
Agreement (the "Purchase Price") is:
a base consideration of R210,000,000 (Two Hundred and Ten Million Rand);
and
b.an earn-out consideration ("the Earn- Out Consideration")calculated as
follows:
- If the EBITDA of the sold businesses and assets for the financial year
ending 30 June 2010 exceeds R40,000,000, then the Seller shall be
entitled to the payment of the Earn-out Consideration calculated in
accordance with the following formula:
- (the amount by which the EBITDA exceeds R40,000,000 / R6,000,000)
x R25,000,000, provided that the Earn-out Consideration shall
under no circumstances exceed R25,000,000.
The Purchase Price shall be adjusted upwards or downwards on a Rand for Rand
basis to the extent that the net working capital of the Seller on the Closing
Date exceeds or is less than an amount of R135,000,000.
Payment of the Purchase Price
The Purchase Price shall be paid as follows:
An amount of R179,000,000 is to be paid once the Closing Conditions have been
fulfilled and against delivery of the business of Tsunami Crop and the assets of
Tsunami Plant, excluding the formulation plant assets. It is expected that
these conditions will be fulfilled during April 2010.
An amount of R14,000,000 is to be paid once the net working capital of the
Tsunami Companies as at the Closing Date has been determined, unless the
Purchase Price has to be adjusted, as mentioned above, in which case the amount
of R14,000,000 will be increased or decreased by the amount of the adjustment.
In the event of a decrease in the Purchase Price of more than R14,000,000,
Tsunami Crop will have to repay the amount of such difference to Arysta. It is
expected that this amount will be paid within 100 days of the Closing Date.
A further amount of R17,000,000 will be paid against delivery to Arysta of the
formulation plant assets. It is expected that such delivery will occur within
12 months of the Closing Date.
The Earn-Out Consideration (if any) will be paid within 5 business days of the
date on which the EBITDA of the Tsunami Companies for their sold business and
assets for the financial year ending on 30 June 2010 has been finally determined
in accordance with the provisions of the Agreement.
Utilisation of proceeds
The proceeds of the Transaction will be applied towards the reduction of working
capital within the AFGRI Group and possible expansions or investments.
Pro forma financial effects of the Transaction
1. The unaudited pro forma financial effects of the Transaction will not
have an effect of greater than 3% on the earnings per share ("EPS"),
headline EPS, net asset value("NAV") and tangible NAV as per the
latest published consolidated audited results of AFGRI for the year
ended 30 June 2009.
3. CONDITIONS TO CLOSING
The obligation of the Purchaser to proceed with the closing and
consummation of the Transaction is subject to the satisfaction of inter
alia the following conditions:
a. the approval by the South African Reserve Bank of the Purchaser`s
financing arrangements to settle the Purchase Price;
b. the unconditional approval of the Competition Authorities;
c. the approval of the Transaction by the board of directors of Arysta
LifeScience Corporation;
d. certain key management employees of the Tsunami Companies signing
executive employment contracts and restraints of trade with the
Purchaser;
e the termination of the management agreement between Tsunami Plant and
Tsunami Crop and the transfer of employees providing predominantly
formulation services by Tsunami Crop to Tsunami Plant;
f. the leasing of the Heidelberg property by Tsunami Crop to Tsunami
Plant for the duration of the Toll Manufacturing Agreement (to be
entered into between Tsunami Plant and the Purchaser);
g. the Purchaser securing new freehold or leasehold premises for the
establishment of a depot, offices and associated infrastructure and
facilities to replace the corresponding facilities currently utilized
by the Seller;
h. the Tsunami Companies furnishing the Purchaser with proof that all
their product registrations due to expire on or about May 2009 or any
other date prior to the closing date of the Transaction, have been
renewed for the next registration term of no less than 12 months);
i. the Seller providing the Purchaser with a guarantee by AFGRI
Operations and Nulane Investments 64 (Proprietary) Limited ("Nulane"),
the minority shareholder of a 17.5% interest in the Tsunami Companies,
for the obligations of the Seller in terms of the Agreement and the
Toll Manufacturing Agreement; and
j. the shareholders of the Seller (AFGRI Operations and Nulane) approving
of the Transaction by way of special resolutions in terms of section
228 of the Companies Act 61 of 1973, as amended.
4. CATEGORISATION AND WITHDRAWAL OF CAUTIONARY
The Transaction is a Category 2 transaction for AFGRI in terms of section 9.5(a)
of the JSE Listings Requirements and accordingly, approval by shareholders of
AFGRI is not required.
Shareholders are referred to the cautionary announcement dated 19 January 2010
and are advised that as a result of the conclusion of the agreements between
AFGRI and Arysta to dispose of the businesses of the Tsunami Companies, caution
is no longer required to be exercised by shareholders when dealing in their
securities.
Centurion
1 February 2010
Sponsor
Investec Bank Limited
Transactional Attorneys for AFGRI Operations and the Tsunami Companies
Webber Wentzel
Transactional Attorneys for Arysta
Shepstone and Wylie
Date: 01/02/2010 13:30:37 Produced by the JSE SENS Department.
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