| Wed 7 Apr 2010, 16:21 | | SPG - Super Group Limited - Further announcement regarding the proposed sale by |
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SPG
SPG
SPG - Super Group Limited - Further announcement regarding the proposed sale by
Super Group of Autozone and Renewal of cautionary announcement
SUPER GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1943/016107/06)
Share code: SPG
ISIN: ZAE000011334
("Super Group")
FURTHER ANNOUNCEMENT REGARDING THE PROPOSED SALE BY SUPER GROUP OF AUTOZONE AND
RENEWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Super Group shareholders are referred to the announcements released on 28
May 2009, 30 July 2009 and 26 October 2009, whereby shareholders were
advised that Super Group and Super Group Trading (Proprietary) Limited
("the Sellers") and a consortium of investors led by RMB Corvest ("the
Purchaser") had reached agreement in terms of which the Purchaser will
acquire the entire issued ordinary share capital of Partcorp Holdings
Limited ("AutoZone"), a 95% held subsidiary of Super Group ("the Original
Transaction" or "the AutoZone Disposal").
Subsequently, for reasons of commercial feasibility, the Original
Transaction has been mutually cancelled by Super Group and the Purchaser,
and superseded by the conclusion of a new agreement ("the Amended
Transaction").
The significant differences between the terms of the Original Transaction
and the Amended Transaction are as follows:
1.1 Super Group will now purchase Weirfield Investment Holding (Proprietary)
Limited`s ("Weirfield") 5% minority interest in AutoZone for a
consideration of R21 750 000.00 before conclusion of the disposal of the
entire issued share capital to the Purchaser ("the Weirfield Transaction");
1.2 a value of R97.5 million has been attributed to the preference shares held
by Super Group;
1.3 the date on which all economic benefits related to AutoZone vest in the
Purchaser has been amended from 1 July 2009 to 31 December 2009;
1.4 Super Group has opted to dispose of the entire issued share capital of
AutoZone (ordinary and preference shares) together with the claims between
Partcorp and Super Group ("the Sales Claims") whereas previously only a
sale of the ordinary shares of AutoZone for value was contemplated;
1.5 the deferred consideration of R35 million, previously interest-free, now
bears interest at a rate of 1.2% per annum;
1.6 the Purchaser has assumed a liability of R27 million payable to Super Group
on the effective date of the Amended Transaction;
1.7 certain warranties given by Super Group to the Purchaser related to
inventories, property, plant and equipment, patents and trademarks have
been dispensed of in the Amended Transaction;
1.8 Super Group will now make available to the Purchaser certain trade finance
and letter of credit facilities of approximately R90 million, secured by a
R45 million bank guarantee by the Purchaser and security over all
associated goods in transit;
1.9 Weirfield has waived any and all claims it may have against Super Group;
and
1.10 a key requirement of the Original Transaction was that Super Group would
warrant to the Purchaser that Auto Parts Distributor`s earnings before
interest, tax, depreciation and amortization ("EBITDA") adjusted for
normalisation adjustments would be no less than R86 million. The purchase
price would reduce in line with any reductions in the calculated EBITDA in
accordance with a formula provided that the calculated EBITDA did not
reduce below R80 million. Taking into account normalisation adjustments
(including non-recurring redundancy costs, restructuring costs and once off
foreign exchange losses), the normalised EBITDA target of R86 million was
exceeded and consequently the warranty clauses were omitted from the
Amended Transaction.
2. Related party transaction
Both the Weirfield Transaction and the Amended Transaction constitute a
related party transaction as contemplated by paragraph 10.1 of the JSE
Limited ("JSE") Listings Requirements ("the Listings Requirements").
The Weirfield Transaction represents a related party transaction as
contemplated by paragraph 10.1 of the Listings Requirements in that a
former director of AutoZone was a previous member of Weirfield.
The Amended Transaction represents a related party transaction as
contemplated by paragraph 10.1 of the Listings Requirements in that certain
current and past directors of Super Group subsidiaries and an associate of
an advisor and a significant lender to Super Group are members of the
Purchaser.
3. Opinions and recommendations
The board of directors of Super Group ("the Board") has been advised by an
independent expert on the Weirfield Transaction and the Amended
Transaction. The fairness opinion provided by the independent expert will
be included in the circular to Super Group shareholders referred to in
paragraph 9 below together with an opinion by the Board.
The Board (excluding the current directors of Super Group who are members
of the Purchaser and members of Weirfield) will vote in favour of the
Amended Transaction and recommend that shareholders of Super Group vote in
favour of the Amended Transaction.
4. Purchase consideration
The purchase consideration is an aggregate of R435 000 000.00, made up as
follows:
* R 115 000 000.00 in respect of the ordinary shares;
* R 115 000 000.00 in respect of the preference shares; and
* R 205 000 000.00 in respect of the Sales Claims between AutoZone and
Super Group.
The purchase consideration is payable as follows:
* R400 000 000.00 as set out in the sale of shares agreement, on the
third business day following the effective date of the Amended
Transaction; and
* the remaining R35 000 000.00 ("the Deferred Consideration"), in the
Sellers` proportions (as set out in the sale of shares agreement), on
1 July 2012 provided Super Group is not in breach of the agreement.
The R400 000 000.00 purchase consideration will attract interest at the
prime rate less 4.5% from 1 January 2010 until payment date, and the
Deferred Consideration bears interest at a rate of 1.2% per annum payable
with the capital.
The Purchaser will not take on or assume any liability owing by AutoZone or
its subsidiaries to Super Group`s operations in Mauritius or any other
inter-company loans (other than the Sales Claims) or any outstanding tax
liability of whatever nature, and such liabilities are excluded from the
Amended Transaction and will be assumed by Super Group. The Tradestream
investment in RMB Global Solutions (Pty) Ltd held by AutoZone is excluded
from the assets of AutoZone and does not form part of the Amended
Transaction. In addition, Super Group assumes responsibility for unwinding
and settling the debtors` securitisation arrangement to ensure that the
AutoZone debtors are unencumbered on the closing date of the Amended
Transaction. Any amounts to be paid by or on behalf of Super Group to give
effect to these exclusions shall be considered a reduction of the purchase
consideration proceeds.
The net cash proceeds after settlement of the obligations related to the
abovementioned excluded items is expected to be R90 million. In accordance
with the provisions of the Super Group debt restructuring agreement, the
remaining cash proceeds will be utilised to settle short-term debt.
5. Other terms of the Amended Transaction
The Purchaser will remain liable for all obligations of the employees and
staff of AutoZone
All assets (including the shares in and claims against AutoZone) shall be
delivered free of any encumbrances.
Super Group binds itself in favour of the Purchaser as surety for and co-
principal debtor in solidum with Super Group Trading (Proprietary) Limited,
for the payment to the Purchaser of all sums of money which the Sellers may
owe or be indebted to the Purchaser arising from the Sellers` obligations
to the Purchaser in terms of the Amended Transaction.
Normal warranties for a transaction of this nature have been given, duly
qualified by the appropriate disclosures given.
Super Group will provide a 5-year non-compete restraint in the SADC region.
Super Group is however permitted to continue holding its existing interests
in parts sales and distribution.
6. Effective date
The effective date of the Amended Transaction is the first business day of
the month following the month in which the last condition precedent is
fulfilled or waived.
7. Conditions Precedent
The Amended Transaction is subject to, inter alia, the fulfilment or waiver
of the following conditions precedent:
* receipt of written confirmation from the parties to the debtors`
securitisation arrangement, that, upon receipt of the amount
outstanding in respect thereof, they shall cancel the arrangement;
* receipt of all necessary regulatory, governmental or similar
clearances, approvals and decisions, including approval from
shareholders of Super Group and from the JSE to the extent required;
and
* written confirmation from the funder of the Purchaser, within 14 days
of signature of the Amended Transaction, confirming that it is
irrevocably committed to fund the Amended Transaction, subject only to
its conditions contained in its term sheet, which are standard in
transactions of this nature.
8. Pro forma financial effects, forecast information and specific information
relating to the Amended Transaction
ONCE THE MAJORITY OF THE CONDITIONS ARE MET AND THE PRO FORMA FINANCIAL
EFFECTS OF THE AMENDED TRANSACTION CAN BE DETERMINED, THE APPROPRIATE
ANNOUNCEMENT WILL BE MADE BY SUPER GROUP.
9. Circular to Super Group shareholders
A circular providing information on the Amended Transaction and a notice
convening a general meeting of Super Group shareholders to approve the
Amended Transaction, will be posted to Super Group shareholders in due
course.
10. FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are advised to continue exercising caution until the detailed
financial effects of the Amended Transaction are known.
7 April 2010
Sandton
Financial advisor and Sponsor to Super Group
Deutsche Securities (SA) (Proprietary) Limited
Independent professional expert
Java Capital (Proprietary) Limited
Auditors and reporting accountants
KPMG Incorporated
Attorneys for Super Group
Fluxmans Attorneys
Attorneys for the Purchaser
McPherson Kruger Attorneys
Date: 07/04/2010 16:21:01 Produced by the JSE SENS Department.
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