| Thu 19 Aug 2010, 15:36 | | EXL - Excellerate Holdings Limited - Further announcement |
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EXL
EXL
EXL - Excellerate Holdings Limited - Further announcement
EXCELLERATE HOLDINGS LIMITED
(Registration number 1997/009884/06)
JSE Code: EXL ISIN: ZAE000026092
(Incorporated in the Republic of South Africa)
("Excellerate" or "the Group")
FURTHER ANNOUNCEMENT REGARDING THE ACQUISITION BY EXCELLERATE AND A
MANAGEMENT CONSORTIUM OF THE ENTIRE ISSUED SHARE CAPITAL OF GENSEC PROPERTY
SERVICES LIMITED T/A JHI ("JHI") AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the cautionary announcements dated Monday, 8 February 2010,
Friday, 7 May 2010 and the proposed acquisition announcement dated 24
June 2010, shareholders of Excellerate ("Shareholders") are advised that
Excellerate has entered into a sale and disposal of shares agreement
("the Agreement") on Wednesday, 28 July 2010 with JHI, the current
shareholders of JHI ("JHI Shareholders") and Nervada Trading
(Proprietary) Limited ("Newco"), a private company, which will
ultimately be owned jointly by Excellerate (as to 60%) and the current
management of JHI (as to 40%), in terms of which Newco, subject to the
fulfillment of the remaining suspensive condition set out in paragraph 5
below, will acquire the entire issued share capital of JHI, comprising
151,515 ordinary shares of one cent each ("the Transaction").
The aggregate purchase consideration ("the Purchase Consideration")
payable by Newco for the shares in JHI will amount to R135,000,020,
which Purchase Consideration shall be funded as detailed in paragraph 4
below.
In terms of Rule 34 of the Securities Regulation Code on Takeovers and
Mergers ("the Code") and Rules of the Securities Regulation Panel ("the
SRP"), the SRP has granted dispensation that the Transaction need not
comply with the Code.
2. Background on Excellerate and JHI
Excellerate is an investment holding company listed on the JSE Limited
("the JSE"), with two core business divisions, namely (i) trading and
distribution (ii) and services.
JHI is a well established property services company with more than a
century of experience in the rendering of property related services.
JHI comprises the combined businesses of Gensec Property Services
Limited and JHI Real Estate Limited pursuant to a merger transaction
implemented in 2007.
3. Rationale for the Transaction
Within Excellerate`s Services Division, Interpark and Sterikleen already
constitute a key focus on property related services. The addition of
JHI will strengthen this focus considerably, and it is expected that
some synergistic benefits will accrue. Consequently, the profile of the
Transaction matches Excellerate`s acquisitive strategy. In addition,
JHI has a solid track record and reputation in property services, and
has good prospects for growth. The ongoing participation of the current
management of JHI is a key element of the Transaction and should ensure
that JHI continues to operate seamlessly following the implementation
thereof.
4. Purchase Consideration and Funding
The Purchase Consideration shall be paid by Newco to the JHI
Shareholders, in proportion to their holdings, on the 7th calendar day
following the date of fulfillment of the remaining suspensive condition.
The Purchase Consideration will be funded as follows:
4.1 an amount of R70,000,000 from third party funding, comprising a
combination of senior and mezzanine debt, with no recourse to
Excellerate ("the Third Party Funding"), and existing post
acquisition cash reserves in the Newco/JHI structure of
R15,000,020;
4.2 an amount of R30,000,000 from loan funding to be advanced by
Excellerate, which loan funding will be subordinated to the Third
Party Funding; and
4.3 an amount of R20,000,000 from an equity reinvestment by the current
management shareholders of JHI of a portion of the Purchase
Consideration to be received by them in terms of the Transaction.
5. Suspensive condition
The Transaction is subject to the fulfillment of the remaining
suspensive condition that the requisite approval for purposes of the
Transaction, on terms and conditions reasonably acceptable to all of the
parties, is obtained from the competition authorities by no later than
Friday, 1 October 2010.
Given that, in accordance with the Act as well as the Listings
Requirements of the JSE ("Listings Requirements"), each of Newco and JHI
would, following the Transaction, be considered a subsidiary of
Excellerate, the articles of association of such entities will be
amended to conform to Schedule 10 of the JSE Listings Requirements.
The Transaction has been categorized as a Category 2 transaction in
terms of the Listings Requirements of the JSE and, accordingly,
Shareholder approval is not required.
6. Warranties, Terms and Conditions
The Transaction is subject to the usual warranties and terms and
conditions associated with a transaction of this nature.
7. Effective Date
The effective date of the Transaction will be the 7th calendar day
following the fulfillment of the remaining suspensive condition.
8. Unaudited pro forma financial effects of the Transaction
The unaudited pro forma financial effects as set out below have been
prepared for illustrative purposes only to assist Shareholders in
assessing the impact of the Transaction on earnings per share ("EPS"),
headline earnings per share ("HEPS"), net asset value per share
("NAVPS") and tangible net asset value per share ("TNAVPS").
The pro forma effects have been applied to Excellerate`s income
statement and balance sheet for the six months ended 31 December 2009.
These unaudited pro forma financial effects have been disclosed in terms
of the Listings Requirements and, because of their nature, may not
fairly present Excellerate`s financial position, changes in equity,
results of operations or cash flows.
The unaudited pro forma financial effects are the responsibility of the
directors of Excellerate.
Unaudited Pro forma Change
before after (%)
Transaction Transaction
EPS (cents) 7,42 8,41 13,3
HEPS (cents) 7,42 8,41 13,3
NAVPS (cents) 97,0 97,0 0,0
TNAVPS (cents) 50,7 0,6 (98,7)
Weighted average 217,436 217,436 0
number of shares
in issue (`000)
Shares in issue 217,864 217,864 0
at year end
(`000)
Notes:
1. The EPS and HEPS, as disclosed in the "before" column of the table,
are based on Excellerate`s unaudited interim financial results for
the six months ended 31 December 2009.
2. EPS and HEPS effects as disclosed in the "after" column of the
table have been prepared on the basis of the following assumptions
and information:
a. Newco`s contribution to the consolidated Excellerate Group
profit has been based on the unaudited management accounts of
JHI for the six month period ended 31 December 2009.
Excellerate accordingly confirms its comfort with these
unaudited management accounts;
b. Interest has been applied at prime rates on third party
funding of R30,000,000 raised by Excellerate for purposes of
the Transaction;
c. Interest has been applied at the rates agreed with the
relevant third party funder with respect to non-recourse,
third party, interest bearing debt of R70,000,000 injected
into the structure of the Transaction;
d. Non-recurring transaction costs of R2,495,000 have been
incurred for this Transaction; and
e. Preliminary Purchase Price Allocations have been performed and
the financial effect of the amortisation of intangibles, have
been included in the financial effects above.
3. The NAVPS and TNAVPS, as set out in the "before" column of the
table, are based on Excellerate`s unaudited interim financial
results for the six months ended 31 December 2009.
4. The NAVPS and TNAVPS as set out in the "after" column are based on
the net assets attributable to the interest in JHI acquired by
Excellerate and on the unaudited management accounts of JHI at 31
December 2009. Excellerate accordingly confirms its comfort with
these unaudited management accounts.
Further clarification in terms of the pro forma financial effects as set
out above:
1. The above calculation of pro forma effects has taken into account
non-recurring Transaction costs of R2,495,000. Had these costs been
excluded from the pro forma calculations, the EPS and HEPS would
have been 9,02 cents per share representing an increase in EPS and
HEPS of 21,5%.
2. The above calculation of pro forma effects indicates that this
transaction will result in a reduction in TNAVPS of 50,10 cents per
share. It should however be noted that the Third Party Funding of
R70,000,000 raised for purposes of the Transaction has been
included in full in the consolidated Excellerate Group Statement of
Financial Position for the purposes of calculating these financial
effects. This funding is completely ring-fenced to Newco and its
subsidiaries, and the third party funder has no recourse to
Excellerate in terms thereof. This debt accounts for 32,1 cents per
share of the reduction in TNAVPS.
9. Withdrawal of cautionary announcement
Shareholders are advised they no longer need to exercise caution when
dealing in their Excellerate securities.
Johannesburg
19 August 2010
Sponsor:
Barnard Jacobs Mellet Corporate Finance (Proprietary) Limited
Attorneys
Glyn Marais Incorporated
Date: 19/08/2010 15:36:02 Produced by the JSE SENS Department.
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