| Tue 4 May 2010, 9:12 | | AFT - Afrimat - Acquisition by Afrimat of the entire issued share capital of |
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AFT
AFT
AFT - Afrimat - Acquisition by Afrimat of the entire issued share capital of
and claims against Glen Douglas Dolomite (Pty) Limited
Afrimat Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2006/022534/06)
Share code: AFT & ISIN: ZAE000086302
("Afrimat" or "the Company")
Acquisition by Afrimat of the entire issued share capital of and claims against
Glen Douglas Dolomite (Pty) Limited ("Glen Douglas")
1. Introduction
Bridge Capital Advisors (Pty) Limited ("Bridge Capital") is authorised to
announce that Afrimat has entered into an agreement to acquire the entire
issued share capital of and all claims against Glen Douglas from Exxaro
Resources Limited ("the seller") for a consideration of R35 million ("the
acquisition").
2. Background to Glen Douglas
Glen Douglas operates a dolomite mine located in the southern part of
Gauteng, some 32km south of Alberton and 26km north of Vereeniging. The
mine has been in existence since 1954 and there are remaining dolomite
reserves for between 30 to 40 years. The mine is an open pit operation that
produces metallurgical dolomite, commercial aggregates and agricultural
lime products. Glen Douglas holds a new order mining license.
Metallurgical dolomite is supplied to steel producers, commercial
aggregates to the surrounding concrete products and construction industries
and agricultural lime to the agricultural industry. Glen Douglas recorded
sales volumes in respect of its 2009 financial year of approximately 1.2
million tons, which equates to 20.7% of Afrimat`s current aggregates sales
volumes.
3. Rationale for the acquisition
Afrimat considers the acquisition of Glen Douglas to be an extremely
exciting opportunity in view of the vast potential which could be unlocked
once the Afrimat operational model is implemented.
This acquisition is Afrimat`s first venture into industrial minerals and is
in line with the Company`s strategy to expand into synergistic industries
and will furthermore enhance Afrimat`s position in high growth market
segments.
Glen Douglas will give Afrimat a much stronger presence in Gauteng and
improve Afrimat`s strategic ability to service clients based in the
Western, South Western and Southern parts of Gauteng. Glen Douglas has an
established market presence and further opportunities exist to increase
volumes to existing customers as well as to the civil construction
industry.
4. Details of the acquisition
4.1 Effective date
The effective date of the acquisition will be last day of the month during
which the suspensive conditions are met or waived.
4.2 Salient terms
4.2.1 During the period commencing from the date upon which the
agreements were signed and the effective date ("the interim
management period"), Afrimat and the seller have undertaken to
establish a steering committee, which will deal with material
decision making in relation to Glen Douglas during the interim
management period.
4.2.2 The seller will settle all its obligations in respect of Glen
Douglas employees concerning management and employee share
incentive schemes on the effective date.
4.3 The acquisition consideration
The aggregate acquisition consideration payable amounts to R35 million
which shall be adjusted:
4.3.1 upward in the event of any capital expenditure being incurred by
Glen Douglas during the interim management period;
4.3.2 upward in event that the working capital of Glen Douglas at the
effective date is greater than the working capital reflected in
the management accounts presented to Afrimat; and
4.3.3 downward in event that the working capital of Glen Douglas at the
effective date is less than the working capital reflected in the
management accounts presented to Afrimat.
4.4 Suspensive conditions
The acquisition is subject, inter alia, to the fulfilment of the following
suspensive conditions:
4.4.1 the seller obtaining approval as required in terms of Section 11
of the Mineral and Petroleum Resources Development Act, No 28 of
2002;
4.4.2 Afrimat obtaining requisite approval in terms of Chapter 3 of the
Competition Act 1998 (Act 89 of 1998); and
4.4.3 Afrimat obtaining the necessary environmental rehabilitation
guarantees to the satisfaction of Department of Mineral
Resources.
5. Articles of association
Pursuant to the transaction, Glen Douglas will become a subsidiary of
Afrimat. In accordance with paragraph 9.16 of the JSE Listings Requirements
(`the Listings Requirements"), the articles of association of Glen Douglas
will be amended to conform to Schedule 10 of the Listings Requirements.
6. Pro forma financial effects of the acquisition
The unaudited pro forma financial effects of the acquisition, as set out
below, are based on Afrimat`s published results for the six months ended 31
August 2009 and the management accounts of Glen Douglas for the six months
ended 31 August 2009. Afrimat`s directors are satisfied with the quality of
such management accounts. The unaudited pro forma financial effects are
presented for illustrative purposes only, to provide information on the
impact of the acquisition. Due to the nature of the unaudited pro forma
financial effects, they may not give a fair representation of Afrimat`s
financial position and the results of its operations after the acquisition.
Afrimat`s directors are responsible for the preparation of the unaudited
pro forma financial information.
Before After the Percentage change (%)
the acquisiti
acquisiti on
on(1)
Earnings per share (cents) 31.34 35.50(2)( 13.3
3)
Diluted earnings per share 31.14 35.27(2)( 13.3
(cents) 3)
Headline earnings per share 29.65 28.36(2) (4.3)
(cents)
Diluted headline earnings per 29.45 28.18(2) (4.3)
share (cents)
Net asset value per share 382.14 386.97(4) 1.3
(cents)
Net tangible asset value per 301.03 305.86(4) 1.6
share (cents)
Notes:
1. Extracted from the financial statements of Afrimat for the six months ended
31 August 2009.
2. Earnings, diluted earnings, headline earnings and diluted headline earnings
per share in the "After the acquisition" column have been based on the
following assumptions:
a. The acquisition was implemented on 1 March 2009;
b. The weighted average number of Afrimat shares in issue of 133,585,941
before and after the acquisition;
c. The diluted weighted average number of Afrimat shares in issue of
134,453,353 before and after the acquisition;
d. Estimated transaction costs amounting to R349 000 were taken into
account; and
e. Interest charged on funds utilised by Afrimat to fund the acquisition
at a pre-tax rate of 10% per annum was taken into account.
3. Earnings and diluted earnings per share include the write-off of negative
goodwill arising from the acquisition amounting to R7.3 million, which is
viewed as a non-recurring increase in earnings.
4. Net asset value and net tangible asset value per share in the "After the
acquisition" column have been based on a total number of Afrimat shares in
issue (including treasury shares) of 143,262,412 before and after the
acquisition.
Cape Town
04 May 2010
Sponsor and corporate advisor: Bridge Capital Advisors (Pty) Limited
Date: 04/05/2010 09:12:02 Produced by the JSE SENS Department.
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