| Wed 11 Aug 2010, 7:05 | | AFR - AFGRI Limited - Acquisition of Rossgro Chickens (Proprietary) Limited |
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AFR - AFGRI Limited - Acquisition of Rossgro Chickens (Proprietary) Limited
AFGRI Limited
Registration Number: 1995/004030/06
(Incorporated in the Republic of South Africa)
ISIN: ZAE000040549
JSE share code: AFR
("AFGRI" or "the Company")
Acquisition of Rossgro Chickens (Proprietary) Limited
1. INTRODUCTION
1.1 Daybreak Farms (Proprietary) Limited ("the Purchaser"), Rossgro
Chickens (Proprietary) Limited ("the Seller"), Gro Capital Financial
Services (Proprietary) Limited (a wholly-owned subsidiary of AFGRI
Operations Limited) ("Gro Capital") and Geluk 234 Eiendomme
(Proprietary) Limited (a subsidiary of Rossgro Holdings (Proprietary)
Limited) ("Geluk 234") have entered into a binding sale of business
agreement ("the Agreement") in terms of which the Purchaser will, upon
fulfilment of the suspensive conditions referred to in paragraph 3
below (`"the Conditions"), acquire the business of the Seller as a
going concern ("the Transaction"). The Purchaser is a wholly owned
subsidiary of AFGRI Operations Limited ("AFGRI Operations") which is
in turn a wholly owned subsidiary of the Company.
1.2 The Purchaser`s business is the farming, slaughtering, processing and
selling of chickens. The Seller operates a chicken abattoir,
processing and sales business ("the Business").
2. THE TRANSACTION
2.1 Rationale
As part of the Purchaser`s growth strategy, it identified the Business
as a valuable asset which would enable it to immediately increase its
existing capacity and in this way enable AFGRI to be a more
significant market player.
2.2 Terms of the Transaction
In terms of the Transaction, the Seller will sell the Business as a
going concern (other than certain excluded assets and liabilities) to
the Purchaser with effect from the effective date of the Transaction,
which will occur once the last of the Conditions has been satisfied
("Effective Date").
2.3 Purchase price
2.3.1 The purchase consideration payable by the Purchaser to the
any) as set out below in paragraph 2.3.2 ("the Purchase
Price").
2.3.2 After the Effective Date, the stock, debtors and trade
creditors of the Business will be valued and to the extent
that the value of the stock and debtors is more or less than
the value of the trade creditors, the Purchase Price will be
adjusted upwards or downwards by the amount of this
difference. Based on the current financial statements of the
Seller the adjustment of the Purchase Price should not
exceed R3 000 000.00.
2.3.3 Once the Conditions have been fulfilled and on the closing
of the Transaction, the Purchase Price shall be paid as
follows:
2.3.3.1 an amount equal to the market value of the land and
immovable improvements situated at Portion 21 of the Farm
Geluk 234, Registration Division I.R., Mpumalanga Province
("the Immovable Property") (approximately R200 000 000,
depending on the official valuation given by an independent
property valuator) ("the Property Purchase Price") will be
held in trust and will, subject to the amount owing to Gro
Capital being settled as envisaged in paragraph 2.3.3.2, be
paid to the Seller against transfer of the Immovable
Property;
2.3.3.2 an amount equal to the face value (together with all accrued
interest thereon) of the Seller`s indebtedness to Gro
Capital will be settled (either partially or in full) on the
closing date of the Transaction by applying set-off between
the outstanding balance (being approximately R28 million) of
the amount of the Purchase Price (after deducting the
Property Purchase Price) and the amount owed to Gro Capital.
To the extent that the amount owing to Gro Capital is not
settled in full on the closing date of the Transaction, the
balance of this amount will set off against the Property
Purchase Price prior to the Property Purchase Price being
paid to the Seller as envisaged in paragraph 2.3.3.1; and
2.3.3.3 the balance (if any) of the Purchase Price shall be paid in
cash to the Seller on the closing date of the Transaction.
2.4 Pro forma financial effects of the Transaction
2.4.1 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 six months ended 31 December 2009 are not
significant (i.e. are less than 3%), and have therefore not
been disclosed.
2.4.2 It is expected that the synergies derived from the
Transaction should have a beneficial impact on the AFGRI
Group.
3. SUSPENSIVE CONDITIONS
The Transaction is subject to the satisfaction of, inter alia, the
following conditions:
3.1 the sole shareholder of the Seller approving the Transaction by way of
a special resolution in terms of section 228(1) of the Companies Act
61 of 1973, as amended;
3.2 the shareholders of Rossgro Holdings (Proprietary) Limited ("Rossgro
Holdings") (being the sole shareholder of the Seller) approving the
Transaction by way of a special resolution in terms of section 228(2)
of the Companies Act 61 of 1973, as amended;
3.3 certain operational agreements being entered into between the
Purchaser and the Seller (or companies within the Seller`s group of
companies) relating to the supply of feed, broilers and by-products;
3.4 Geluk 234 entering into a lease agreement with the Purchaser ("the
Lease Agreement") in terms of which it leases a portion of Portion 1,
Remaining Extent of the Farm Geluk 234, Registration Division I.R.,
Mpumalanga Province ("the Adjacent Property") to the Purchaser for the
purposes of the Purchaser being able to extract, use and store water
on the Adjacent Property and the registration of the Lease Agreement
at the relevant Deeds Office against the title deed of the Adjacent
Property;
3.5 the unconditional approval of the Transaction by the South African
Competition Authorities;
3.6 Rossgro Holdings and each of its affiliates entering into restraint of
trade undertakings in favour of the Purchaser;
3.7 Rossgro Holdings providing a guarantee to the Purchaser guaranteeing
all of the obligations of the Seller under this Agreement;
3.8 the Seller delivering to the Purchaser all rights, licences, permits
concessions or authorisations which are required to conduct the
Business;
3.9 the Seller delivering to the Purchaser certain documents, licences and
approvals in respect of the operation of the Business;
3.10 the Seller delivering to the Purchaser its audited and unqualified
financial statements for the financial year ending on 28 February
2010.
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 of the
Transaction by shareholders of AFGRI is not required.
Centurion
10 August 2010
Sponsor
Investec Bank Limited
Attorneys for the Company, AFGRI Operations and the Purchaser
Webber Wentzel
Attorneys for the Seller
Edward Nathan Sonnenbergs
Date: 11/08/2010 07:05:02 Produced by the JSE SENS Department.
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