| Fri 1 Oct 2010, 12:45 | | BIK - Brikor Limited - Acquisition by Brikor of 31% of Ilangabi Investments 12 |
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BIK
BIK
BIK - Brikor Limited - Acquisition by Brikor of 31% of Ilangabi Investments 12
(Pty) Ltd and an option to acquire the remaining 69%, and further cautionary
announcement
BRIKOR LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/013247/06)
JSE code: BIK
ISIN: ZAE000101945
("Brikor" or "the company")
ACQUISITION BY BRIKOR OF 31% OF ILANGABI INVESTMENTS 12 (PTY) LTD AND AN OPTION
TO ACQUIRE THE REMAINING 69%, AND FURTHER CAUTIONARY ANNOUNCEMENT
1 INTRODUCTION
Shareholders are referred to the cautionary announcement, dated 30 August 2010
and are advised that Brikor has entered into a Sale of Shares and Cession of
Claims Agreement with TEL Collins and KE Matebula, dated 31 August 2010 and 1
September 2010 respectively("the agreements"), in terms of which Brikor has
acquired 5% and 26%, respectively, of the issued ordinary share capital in
Ilangabi Investments 12 (Pty) Ltd ("Ilangabi"). Brikor also entered into an
Option Agreement with GvN Parkin("Parkin"), dated 30 September 2010, in terms of
which Brikor has the irrevocable option to acquire the remaining 69% of the
issued ordinary share capital in Ilangabi("the option").
2. BACKGROUND INFORMATION
Brikor manufactures clay bricks, roof tiles, pavers and clay pipes at its main
manufacturing facilities. In addition, Brikor owns the Donkerhoek and Stanger
Quarries, producing sand ,aggregate and concrete(Stanger). Brikor also mines
coal for own use and supplies coal to small consumers.
Ilangabi is a company holding various prospecting and mining rights to which
Brikor has access. At present Ilangabi is awaiting approval of a mining right
over a portion of the Remaining Extent of the Farm Vlakfontein 28 IR, (SAMREC
Compliant resource of 6,1m tons low grade coal and 3,7 million cubic metres of
brickmaking clay). In addition a mining right over Portion 27 of the Farm
Varkensfontein 169 IR has been approved and is awaiting final execution. This
represents a SAMREC Compliant Resource of 485 kiloton low grade coal and 595
million cubic metres clay. Ilangabi also holds a mining right for clay at
Bronkhorstspruit; a prospecting right for limestone near Lichtenburg and a
submitted mining right application for an aggregate Rock Dump near Nigel.
3. RATIONALE FOR THE TRANSACTION
The transaction is in line with Brikor`s growth and vertical integration
strategy. The transaction will enable Brikor to expand its present activities
in the coal market and securing all relevant clay, limestone prospecting and
mining rights. The nature of the coal resource allows Brikor to derive value
from the clay and sandstone overburden.
4. RELATED PARTY
Brikor has entered into an option agreement with Parkin the CEO and shareholder
of Brikor. Parkin holds 60,7% of the issued ordinary share capital of Brikor.
5. PURCHASE CONSIDERATION
The purchase consideration payable by Brikor in terms of the Ilangabi
transaction agreements are the aggregate of:
5.1 R0.3 million, which has already been paid in cash to TEL Collins;
5.2 R1,5 million, payable to KE Matebula in the following manner:
- a number of Brikor shares at a value to be determined by a 10
day volume weighted average price effective on the date of transfer of the
shares, to the value of R0.5 million,
- R0.2 million as a payment in cash on date of signature of the agreement as
well as signature of the required CM42,
- the balance of R0.8 million shall be paid in cash within 12 months of date of
signature of the agreement.
6. THE OPTION
The main terms of the option agreement are as follows::
- The option is exercisable by Brikor at any time on or after 30 September 2015
("the exercise date");
- the option shall be exercised by Brikor by written notice to Parkin duly
signed by the chairman of the audit committee of Brikor who shall be duly
authorised in terms of a resolution of the board of Brikor;
- no consideration is paid for the option, the price payable by Brikor to
exercise the option ("the strike price") shall be R1.2 million plus the claims
on the date of exercise of the option less (i) all amounts owed by Ilangabi to
Brikor on the exercise date; and (ii) all amounts owed by Parkin to Ilangabi on
the exercise date;
- that all economic rights and benefits derived from the mining rights held by
Ilangabi shall vest and are deemed to accrue for the benefit of Brikor on
signature of the option agreement;
- the strike price shall be paid as follows: (i) in the first instance by virtue
of a set off against any amounts owing to Brikor by Parkin against Parkin`s loan
claims against Brikor and (ii) the balance (if any) shall be payable in cash
within ten days after the exercise date of the option subject to the provisions
of the agreements concluded between Brikor and its senior debt providers;
- on exercise of the option the parties shall sign a final sale of share
agreement with such terms and conditions as would be associated with a
transaction of this nature;
-Parkin hereby irrevocably warrants and undertakes the following:
- not to grant any rights or title, interest or benefit in the option shares
and claims to any third party pending 30 September 2015; and
- not to undertake any activity of whatsoever nature which could prejudice the
rights of Brikor as the option holder.
7. EFFECTIVE DATE
The agreements became effective on their signature dates being 30 August 2010
and 1 September 2010 respectively. The option can be exercised at any time
before the exercise date.
8. CONDITIONS PRECEDENT
The transaction is conditionalupon compliance with all regulatory obligations to
the extent necessary to
effect the transaction.
9. FINANCIAL EFFECTS
The financial effects of the transaction are not significant as Ilangabi is not
operational at present.
10. CLASSIFICATION OF THE TRANSACTION
Although the transaction is with a related party the transaction is not
classified as a related party transaction as no consideration is paid for the
option and therefore the category size of the transaction is less than 10%. Upon
exercising of the option the category size will be recalculated.
11. FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are advised to continue exercising caution in dealing in the
company`s securities as Brikor is still in the process of debt restructuring and
the disposal of certain assets.
Johannesburg
1 October 2010
Designated Adviser
Vunani Corporate Finance
Date: 01/10/2010 12:45:01 Produced by the JSE SENS Department.
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