| Fri 5 Feb 2010, 11:00 | | AFR - AFGRI - Disposal Of Western Cape Debtors Book |
|
AFR
AFR
AFR - AFGRI - Disposal Of Western Cape Debtors Book
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 WESTERN CAPE DEBTORS BOOK
1. INTRODUCTION
Shareholders are advised that AFGRI Operations Limited, ("AFGRI
Operations"), Gro Capital Financial Services (Pty) Ltd trading as AFGRI
Financial Services ("Gro Capital"), and AFGRI Western Cape (Pty) Ltd
("AFGRI Western Cape"), all wholly owned subsidiaries of AFGRI, have
reached an agreement, which if it becomes unconditional according to its
terms, will result in the disposal of the following to Capital Harvest
(Pty) Ltd ("Capital Harvest"):
- The debtors book owned by Gro Capital consisting of debtors in or
around the Western Cape region; and
- The assets and liabilities of AFGRI Western Cape; ("Western Cape
business unit"); and
- the transfer of certain employees from AFGRI Operations, Gro Capital
and AFGRI Western Cape to Capital Harvest.
(collectively "the Transaction").
2. THE TRANSACTION
Rationale
The Western Cape business unit currently provides credit products to
farmers, outside of the grain producing geographic areas which are the
strategic focus of AFGRI. As a result, the Transaction is in line with
AFGRI`s strategy to exit business units which are not part of its
identified grain value chain or core business.
AFGRI has been assured that the management philosophy adopted by Capital
Harvest will be in the best interest of the farmers who remain active in
the geographic areas in which the specific business unit are situated.
Terms of the Transaction
AFGRI Operations, Gro Capital and AFGRI Western Cape on 4 February 2010
("the Signature Date") entered into a Sale Agreement ("the Agreement") with
Capital Harvest, which if it becomes unconditional according to its terms
will result in:
1. Gro Capital selling to Capital Harvest, all of Gro Capitals` rights,
title, interest and benefit (both present and future) in and to and
all future obligations in respect of certain claims regarding debtors
in or around the Western Cape region ("Receivables");
2. AFGRI Operations and AFGRI Western Cape selling to Capital Harvest
certain tangible and intangible assets and all of AFGRI Operations and
AFGRI Western Cape`s rights, title, interest in and to in respect of
such assets ("Assets");
3. AFGRI Western Cape delegating its liabilities ("Liabilities") to
Capital Harvest; and
4. AFGRI Operations, Gro Capital and AFGRI Western Cape transferring
certain employees to Capital Harvest.
Effective Date
1 May 2010 or the date which all the suspensive conditions are fulfilled,
whichever is the later in time.
Purchase consideration
The purchase consideration payable by Capital Harvest to Gro Capital in
terms of the Sale Agreement for the Receivables will be calculated as
follows on the effective date:
1. the aggregate (including capitalised accrued interest but excluding
uncapitalised accrued interest) of:
a. the original principal debt financed or advanced, as the case may
be; plus;
b. all further advances and re-advances; plus
c. any other amounts due by the debtor under the terms of a
Receivable that are capitalised and remain outstanding; less
d. any repayments and prepayments of amounts falling in the previous
three sub-paragraphs; less
e. any write-offs;
plus
2. the face value of all uncapitalised and accrued but unpaid interest in
respect of such Receivable; plus
3. any amounts charged in respect of such Receivable to the respective
debtor`s account but unpaid on the effective date; plus
4. in respect of certain Receivables contained in Schedule 9 of the Sale
Agreement an amount equal to the amount referred to as the "Capital
Profit on Repayment".
The purchase consideration payable by Capital Harvest is expected to be
approximately R 371,8 million and the Capital Profit on Repayment is
expected to be approximately R 8,8 million.
5. The purchase consideration payable by Capital Harvest to AFGRI
Operations and AFGRI Western Cape as consideration for the Assets will
be, R1 (one rand) each plus VAT payable on the effective date; and
The Liabilities delegated by AFGRI Western Cape to Capital Harvest are:
- the memorandum of Agreement of Lease between Viking Trust and AFGRI
Western Cape; and
- accrued leave of personnel which, as at 30 November 2009, amounted to
R316 821.00.
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
Group and for potential acquisitions or expansions.
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 Directors
of AFGRI, Gro Capital, AFGRI Western Cape and Capital Harvest;
2. The passing by the shareholders of AFGRI Western Cape of a resolution
in accordance with section 228 of the Companies Act authorising the
sale and transfer of the Assets upon the terms and conditions of this
Agreement and the registration of such resolution with CIPRO;
3. The repurchase by Gro Capital of all Receivables which Gro Capital is
not the owner thereof from the respective financiers and the obtaining
by Gro Capital of all necessary consents to sell the Receivables from
its respective financiers where applicable;
4. The approval of the Competition Authorities with regards to the sale
of the Receivables from Gro Capital to Capital Harvest;
5. The registration of Capital Harvest as a credit provider under the
National Credit Act 34 of 2005;
6. The registration of Capital Harvest as a VAT vendor in terms of the
Vat Act;
7. Capital Harvest obtaining adequate finance in order to purchase the
Receivables in accordance with this Agreement; and
8. The conclusion of a finance agreement between Gro Capital and Capital
Harvest.
4. CATEGORISATION
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.
Centurion
5 February 2010
Investec Bank Limited
Sponsor
Date: 05/02/2010 11:00:08 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
