| Wed 25 Aug 2010, 14:30 | | ISB - Insimbi Refractory and Alloy Supplies - Acquisition by Insimbi |
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ISB
ISB
ISB - Insimbi Refractory and Alloy Supplies - Acquisition by Insimbi
Alloy Supplies (Proprietary) Limited and withdrawal of cautionary
announcement
Insimbi Refractory and Alloy Supplies Limited
(Formerly Insimbi Alloy Supplies (Proprietary) Limited)
Registration number 2002/029821/06
JSE share code: ISB
ISIN Number: ZAE000116828
("Insimbi" or "the Company")
- Acquisition by subsidiary companies of Insimbi of
the entire issued share capitals of and claims on
loan account against Metlite Alloys (Proprietary)
Limited ("Metlite Alloys") and Metlite Alloy
Properties (Proprietary) Limited (Metlite
Properties"); and
- Withdrawal of cautionary announcement
1 Introduction
Further to the cautionary announcements of 28 April 2010, 8 June
2010 and 21 July 2010, shareholders are advised that Insimbi Alloy
Supplies (Proprietary) Limited ("Insimbi Alloys") and Insimbi Alloy
Properties (Proprietary) Limited ("Insimbi Properties"), both
wholly owned subsidiary companies of Insimbi, have concluded
separate agreements whereby, with effect from 13 July 2010, they
will respectively acquire, the entire issued share capitals of and
claims on loan accounts against Metlite Alloys and Metlite
Properties (jointly referred to herein as "Metlite").
2 Background information on Metlite
Metlite, has been in operation for more than 20 years and it`s core
business is manufacturing various high quality aluminium alloys. It
is based in Cape Town where it`s facilities produce aluminium alloy
ingot and aluminium de-oxidant. It is a second tier supplier to
many of the major automotive component manufacturers in South
Africa and abroad as well as the local steel and related
industries.
3 Rationale for the acquisition of Metlite Alloys and Metlite
Properties ("the Transaction")
Metlite`s business is complimentary to that of Insimbi`s. The
acquisition of Metlite will provide various cost efficiencies and
synergies for Insimbi into its Western Cape customer base,
particularly that of production and transport costs which will be
greatly reduced. The combined entity will also provide the Company
with greater buying power for various raw materials. It is
Insimbi`s intention to further expand its footprint and service
offerings into the Western and Eastern Cape and supplement it`s
existing footprint subsequent to the acquisition of Global
Materials SA (Pty) Ltd in Atlantis, by Insimbi in March 2009.
The transfer of skills to Insimbi and the synergies created by the
Transaction will be exceptionally beneficial to the Insimbi group
of companies.
4 Transaction purchase consideration
The purchase consideration for the Transaction will be settled on
the closing date ("closing date") per the respective agreements, on
the following bases:
For Metlite Alloys:
* R5 982 359 in cash to the vendors of Metlite Alloys, namely Mr John
James Magner and Mr John Douglas McGillivray Reid as to 50% each;
and
For Metlite Properties:
* R5 000 000 in cash to the vendors of Metlite Properties, namely The
Magner Family Trust (IT4061/99) represented by Mr John James Magner
and The Reid Family Trust (IT52/81) represented by Mr John Douglas
McGillivray Reid as to 50% each.
5 Effective date
The effective date of the Transaction is 13 July 2010.
6 Financial effects
The table below sets out the pro forma financial effects of the
Transaction, based on the audited annual financial results of
Insimbi for the year ended 28 February 2010.
The financial effects are presented for illustrative purposes only
and because of their nature may not give a fair reflection of the
Company`s results, financial position and changes in equity after
the Transaction. It has been assumed that for the purposes of the
pro forma financial effects, that the transaction took place as at
28 February 2010 for the statement of financial position, and for
the period 1 March 2009 to 28 February 2010, for the statement of
comprehensive income. The directors of Insimbi are solely
responsible for the preparation of the financial effects.
Before the After the % Change
Transaction(1) Transaction(2
)
Earnings per share 4.12 8.26 100.4
(cents)(3)
Headline earnings per 4.13 4.01 (2.9)
share (cents)(3)
Net asset value per 28.09 32.30 15.0
share (cents) (4)
Net tangible asset 12.71 15.96 25.6
value per share
(cents) (4)
Number of shares in 259,658 259,658 0.0
issue (`000)
Weighted average 259,658 259,658 0.0
shares in issue (`000)
Notes:
1 The "Before" information has been extracted, without adjustment
from Insimbi`s published audited annual financial results for the
year ended 28 February 2010;
2 Represents the pro forma financial effects of the transaction,
which has been accounted for in terms of IFRS 3 (revised): Business
Combinations;
3 Earnings per share and Headline earnings per share effects are
based on the following principal assumptions:
(i)the transaction was effective on 1 March 2009;
(ii) Metlite Alloys results have been based on the most recent
management accounts for the period from 1st July 2009 to 30th
June 2010 and audited figures for Metlite Properties for the
financial year ended 28 February 2010;
(iii)Recognition of a profit on the acquisition of
Metlite Alloys and Metlite Properties amounting to R11,0(
after tax effects) as a result of negative goodwill arising
from the preliminary purchase price allocation, which
adjustment is excluded from headline earnings;
(iv) the recognition of the tangible and identifiable intangible
assets is based on a provisional basis, with the allocation of
the purchase price to the assets acquired, on a fair value
basis, for IFRS 3 (revised) accounting purposes.. In terms of
IFRS 3(revised):Business Combinations, the fair value exercise
will be finalised within twelve months of the effective date
of the Transaction and any appropriate adjustments, if
required, will be made; and
(v) Transaction costs of R100 000 which are once off in nature.
4. NAV and NTAV per Insimbi share effects are based on the following
principal assumptions:
(i) the proposed transaction took effect on 28 February 2010;
(ii) the recognition of the tangible and identifiable intangible assets
is based on a provisional basis, with the allocation of the
purchase price to the assets acquired, on a fair value basis, for
IFRS 3 (revised) accounting purposes.. In terms of IFRS
3(revised):Business Combinations, the fair value exercise will be
finalised within twelve months of the effective date of the
Transaction and any appropriate adjustments, if required, will be
made; and
(iii)transaction costs of R100 000 which are once off in
nature.
7 Suspensive conditions
At the date of this announcement, all suspensive conditions were
fulfilled.
8 General warranties and undertakings
The agreements concluded for the Transaction contain general
warranties and undertakings inherent in and usual to transactions
of such nature. No warranties or undertakings are provided which
are unusual or are of an onerous nature.
9 Categorisation and JSE requirements
The Transaction is categorised as a Category 2 transaction for
purposes of the Johannesburg Stock Exchange ("JSE") Listing
Requirements for AltX listed companies.
Upon conclusion of the Transaction, as required by the Listings
Requirements of the JSE, Insimbi has undertaken to have the
Articles of Association of Metlite Alloys and Metlite Properties
amended as to conform with Schedule 10 of the JSE Listings
Requirements.
10 Withdrawal of cautionary announcement
With reference to the cautionary announcements of 28 April 2010, 8
June 2010 and 21 July 2010, as details of the Transaction are now
disclosed, Insimbi shareholders are hereby advised that caution is
no longer required to be exercised by shareholders when dealing in
their securities.
Wadeville, Johannesburg
25 August 2010
Designated Adviser
PricewaterhouseCoopers Corporate Finance (Pty) Ltd
Legal Adviser
Samuel Kennedy Investments (Pty) Ltd
Date: 25/08/2010 14:30:01 Produced by the JSE SENS Department.
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