| Fri 2 Jul 2010, 11:08 | | BAW/BAWP - Barloworld Limited - Disposal of car rental operations in Denmark |
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BAW BAWP
BAW
BAW/BAWP - Barloworld Limited - Disposal of car rental operations in Denmark,
Norway and Sweden
Barloworld Limited
(Incorporated in the Republic of South Africa)
(Registration number 1918/000095/06)
(Share code: BAW)
(JSE ISIN: ZAE000026639)
(Share code: BAWP)
(JSE ISIN: ZAE000026647)
("Barloworld or "the Company")
DISPOSAL OF CAR RENTAL OPERATIONS IN DENMARK, NORWAY AND SWEDEN ("SCANDINAVIAN
CAR RENTAL OPERATIONS")
1. Introduction and rationale
An internal strategic review, concluded in 2008, classified the Scandinavian car
rental operations as non-core and recommended the disposal of the business.
Barloworld has entered into agreements to dispose of the Company`s interests in
the Avis and Budget car rental operations in Denmark, Norway and Sweden ("the
Subject Companies" or "the Scandinavian Car Rental Operations") to a consortium
which includes the chief executive of the Scandinavian Car Rental Operations
("the Bidding Consortium"). The Bidding Consortium was identified as the
preferred bidder in terms of an extensive disposal process which is nearing
completion. The Bidding Consortium submitted an offer to purchase the ordinary
shares of the Scandinavian Car Rental Operations held by Barloworld ("the
Transaction"). The Transaction is expected to be implemented by mid-August
2010, subject to regulatory approvals.
The proceeds will be used to repay group debt and enable the group to redeploy
capital in higher return business opportunities. This will strengthen the
financial position and growth outlook of the Barloworld group as the global
economy recovers.
2. The offer
A firm cash offer of NOK170 million (ZAR222 million) for the entire issued share
capital of the operations in all three countries was made by RAC Holding AS
("the Purchaser"), comprising PETT, a Norwegian investment group (51%), and the
chief executive of the Scandinavian Car Rental Operations (49%).
Material conditions attached to the offer include:
- Payment of NOK170 million (ZAR222 million) in cash on all
conditions precedent being met and the transfer of the shares
to the Purchaser, which conditions include:
1. Avis Europe plc approving the Transaction;
2. Approval by the bankers of the change of ownership in the
Subject Companies pursuant to the loan agreement;
3. Norwegian Competition Authority approval.
- Repayment of the bank loan (net balance of ZAR713 million
owing at 31 March 2010) by the Scandinavian Car Rental
Operations and the release of the Barloworld plc guarantee by
30 September 2010 in line with an agreed debt repayment plan;
and
- Repayment of the Barloworld plc loan of NOK150 million
(ZAR186 million), with interest, by 31 December 2010.
3. Pro forma financial effects
The illustrative pro forma financial effects set out below have been prepared to
assist Barloworld shareholders to assess the impact of the disposal on the
earnings per share (EPS), headline earnings per share (HEPS), net asset value
(NAV) and tangible net asset value (TNAV) per Barloworld share. The material
assumptions are set out in the notes following the table. Due to the nature of
the pro forma financial effects, they may not fairly present Barloworld`s
financial position, changes in equity, results of operations or cash flows after
the disposal, nor the effect on Barloworld`s future earnings. The pro forma
financial effects are the responsibility of the Barloworld board and are
provided for illustrative purposes only.
Before the After the %
Notes disposal disposal change
(cents) (cents)
EPS - basic 1,2 (64.6) (115.4) (79)
EPS - diluted 1,2 (64.2) (114.6) (79)
HEPS - basic 1,2 6.7 40.2 500
HEPS - diluted 1,2 6.6 39.9 505
NAV 3,4 5 292 5 150 (3)
TNAV 3,4 4 146 4 003 (3)
Notes:
1.The EPS and HEPS, as set out in the "Before the disposal" column of the
table, have been extracted from the reviewed condensed financial statements
of the Barloworld Group for the six months ended 31 March 2010 and have
been calculated based on a fully converted weighted average of 208 862 000
Barloworld shares in issue at 31 March 2010.
2.The EPS and HEPS, as set out in the "After the disposal" column of the
table, have been calculated on the earnings of Barloworld after the
disposal of the Scandinavian Car Rental Operations, based on a weighted
average of 208 862 000 Barloworld shares in issue at 31 March 2010 on the
assumption that the disposal had occurred on 1 October 2009 for income
statement purposes.
3.The NAV and TNAV per Barloworld share, as set out in the "Before the
disposal" column of the table, have been extracted from the reviewed
condensed financial statements of the Barloworld Group for the six months
ended 31 March 2010 and calculated based on 209 063 000 Barloworld shares
in issue at 31 March 2010 on the assumption that the disposal occurred on
31 March 2010 for balance purposes.
4.The NAV and TNAV per Barloworld share, as set out in the "After the
disposal" column of the table, have been calculated on the condensed
consolidated Statement of Financial Position of Barloworld after the
disposal of the Scandinavian Car Rental Operations, based on 209 063 000
Barloworld shares in issue at 31 March 2010.
The accounting impact of the transaction will be a net loss on disposal of
approximately ZAR180 million. This will be offset by the benefits arising from
no longer consolidating losses in the Scandinavian Car Rental Operations.
4. Categorisation and related party
The chief executive officer of the Scandinavian car rental operations is a
director in a subsidiary of the Company and therefore a related party in terms
of the Listings Requirements ("Listings Requirements") of the JSE Limited. The
Transaction is classified as a small related party transaction.
5. Independent Expert
In terms of Section 10.7 of the Listings Requirements the Company has appointed
PricewaterhouseCoopers Corporate Finance as the independent professional expert
("the Expert") in order to provide an opinion on the fairness of the
transaction.
The Expert has opined in writing that the terms of the Transaction are fair to
Barloworld shareholders. The fairness opinion will lie for inspection at the
registered office of the Company being 180 Katherine Street, Sandton for a
period of 28 days from the date of this announcement.
Sandton
2 July 2010
Transaction advisors: Mooreland Partners
Legal advisors: Wikborg Rein
Sponsor: J.P. Morgan Equities Limited
Independent expert: PricewaterhouseCoopers Corporate Finance (Pty) Ltd
Date: 02/07/2010 11:08:02 Produced by the JSE SENS Department.
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