| Fri 30 Jul 2010, 14:41 | | SKY - Sea Kay Holdings Limited - Sale of Silver Falcon (Pty) Limited and |
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SKY
SKY
SKY - Sea Kay Holdings Limited - Sale of Silver Falcon (Pty) Limited and
Seriso 474 (Pty) Limited, trading as Sedibeng Bricks, and cautionary
announcement
SEA KAY HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2006/004967/06)
JSE code: SKY
ISIN: ZAE000102380
("Sea Kay" or "the company" or "the group")
SALE OF SILVER FALCON (PTY) LIMITED AND SERISO 474 (PTY) LIMITED, TRADING AS
SEDIBENG BRICKS, AND CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Shareholders are advised that Sea Kay has entered into agreements
relating to the sale of the entire issued share capitals of Silver
Falcon (Pty) Limited ("Silver Falcon") and Seriso 474 (Pty) Limited,
trading as Sedibeng Bricks ("Sedibeng").
1.1 The Silver Falcon disposal
An agreement, dated 30 June 2010, was entered into between Sea Kay
and Mr C Kruger ("the purchaser"), Silver Falcon, Sea Kay
Engineering Services (Pty) Limited, a wholly owned subsidiary of
Sea Kay ("Sea Kay Engineering"), and The Corne Kruger Family Trust
(an associate of the purchaser) ("the trust") in terms of which
the entire issued share capital of Silver Falcon will be sold to
the purchaser for a purchase consideration of R7 343 182.27 to be
settled through a reduction in the loan account owed by Sea Kay
Engineering to the trust.
1.2 The Sedibeng disposal
An agreement, dated 30 June 2010, was entered into between Sea Kay
and the purchaser, Sedibeng, Sea Kay Engineering and the trust in
terms of which the entire issued share capital of Sedibeng will be
sold to the purchaser for a purchase consideration of R10 million
to be settled through a reduction in the loan account owed by Sea
Kay Engineering to the trust.
The Silver Falcon disposal and the Sedibeng disposal are
collectively referred to as "the transactions".
Special conditions relating to the transactions:
It is specifically recorded that in respect of the transactions:
- the purchaser shall not, during the 12 month period during which
the option (as detailed in paragraph 7 below) is exercisable,
incur or expend capital expenditure within the businesses
exceeding R2 million and if such amount is incurred or expended,
same shall not be repayable to Sea Kay should the option be
exercised.
- the purchaser shall negotiate and cancel any and all guarantees
that Sea Kay might have provided to any and all creditors of
Silver Falcon and/or Sedibeng within six months of the effective
date;
- Sea Kay Engineering shall be obliged to settle the full amount
owed to Sedibeng at 30 June 2010 of R2.791 million on or before 31
July 2010.
- Sea Kay has an option, for one year after the effective date/s, to
re-purchase 100% of the shares of both Silver Falcon and Sedibeng
Bricks at the same price and on the same terms as the transactions
except for the fact that Sea Kay will, in addition, be liable to
pay for capital expenditure and/or business improvements incurred
post the effective date up to R2 million plus interest and the
profit after tax from the effective date to the date of exercise
of the option.
2. BACKGROUND INFORMATION
2.1 Silver Falcon
Silver Falcon manufactures high strength, light steel frames for
buildings, steel inside-building envelopes, roofs and steel roof
trusses.
2.2 Sedibeng
Sedibeng manufactures approximately 2.4 million cement bricks per
month for low cost houses and general construction.
3. RATIONALE FOR THE TRANSACTIONS
Currently both Silver Falcon and Sedibeng are unprofitable due to low
levels of construction, a general decline in building activity and the
cash-flow constraints of the group. This places a greater burden on Sea
Kay to concentrate on its core business and the transactions will
immediately benefit the group`s cash-flow position and ability to
increase construction activities.
4. EFFECTIVE DATE
The effective date of the transactions is the date whereon the last of
the suspensive conditions are fulfilled.
5. CONDITIONS PRECEDENT
The suspensive conditions to the transactions have been fulfilled other
than the approval thereof by Sea Kay shareholders.
6. FINANCIAL EFFECTS AND CAUTIONARY ANNOUNCEMENT
The unaudited pro forma financial effects will be announced in due
course. Shareholders are advised to exercise caution when dealing in
the company`s securities until this announcement is published.
7. OPTION TO REPURCHASE THE SHARES IN TERMS OF THE TRANSACTIONS
The purchaser has granted Sea Kay the option to repurchase the shares
of both Silver Falcon and Sedibeng mutatis mutandis on the terms set
out in the respective agreements. The options may only be exercised on
or before the expiry of 12 months from the effective date ("option
exercise date"). The parties have specifically agreed that the
consideration payable in respect of any repurchase shall be the same
amount and on the same terms as set out in the respective agreements,
excluding the fact that Sea Kay shall, in addition, be liable to pay:
- an amount equal to any expenditure on capital equipment and/or
business improvements incurred by the purchaser between the
effective date and the option exercise date limited to an amount
of R2 million;
- interest to the purchaser at the prime rate as from the effective
date to the option exercise date subject to the purchaser not
having received any interest from Silver Falcon and/or Sedibeng in
respect of any loan accounts that may be created; and
- an amount equal to any profit after tax created between the
effective date and the option exercise date and still residing
within Silver Falcon and/or Sedibeng as a declared dividend or
alternative and equitable payment vehicle for the same purpose.
8. CLASSIFICATION OF THE TRANSACTION
In terms of the Listings Requirements of the JSE Limited ("Listings
Requirements"), the transactions are classified as related party
transactions, as the purchaser is a major shareholder of Sea Kay, as
defined in the Listings Requirements, and was also a director of Sea
Kay during the past 12 months.
Accordingly, shareholder approval of the transactions and an
independent opinion relating to the fairness thereof is required in
terms of the Listings Requirements.
9. CIRCULAR TO SHAREHOLDERS
A circular, containing a notice of general meeting of shareholders,
will be dispatched to shareholders in due course.
Johannesburg
30 July 2010
Corporate adviser and sponsor
Vunani Corporate Finance
Legal adviser
TW Ferguson (Pty) Limited
Date: 30/07/2010 14:41:01 Produced by the JSE SENS Department.
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