| Fri 15 Oct 2010, 10:52 | | WEA - WG Wearne Limited - Disposal of Portland Holdings (Pty) Limited |
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WEA
WEA
WEA - WG Wearne Limited - Disposal of Portland Holdings (Pty) Limited
("Portland") and renewal of the cautionary announcement
WG WEARNE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1994/005983/06)
JSE code: WEA
ISIN: ZAE000078002
("Wearne" or "the company")
DISPOSAL OF PORTLAND HOLDINGS (PTY) LIMITED ("PORTLAND") AND RENEWAL OF THE
CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Shareholders are referred to the cautionary announcement, dated 30
September 2010, and are advised that Wearne has entered into an agreement
("sale of shares agreement") with Anco Besigheids Trust ("Anco"),
Willchrest Besigheids Trust ("Willchrest") and Portland Readymix Trust
("PRT") (collectively "the vendors") in terms of which 56 616 370 ordinary
shares ("sale shares") in the company held by the vendors will be returned
to the company in exchange for the entire issued share capital in Portland.
Wearne has simultaneously entered into an agreement ("sale of business
enterprise agreement") regarding the sale of the business enterprise
comprising Portion 8 of the Farm Hoogekraal No 1098, District of Bellville,
Cape Town ("the property") together with lease agreements with Portland
Hollowcore Slabs (Pty) Limited and Portland Readymix (Pty) Limited
regarding tenancy of portions of the property, to Scholgard (Pty) Limited
("Scholgard") for R30 million.
The transactions as contemplated in the abovementioned agreements are
indivisibly linked and are referred to as "the transaction" and the sale of
shares agreement and the sale of business enterprise agreement are referred
to as "the agreements".
Anco and PRT are represented by Mr N Heyns, and Willchrest is represented
by Mr HWP Scholtz. The directors and shareholders of Scholgard are Messrs
Heyns and Scholtz. Messrs Heyns and Scholtz are both directors of Wearne
and are also classified as material shareholders in Wearne in terms of the
JSE Limited Listings Requirements ("Listings Requirements").
The sale shares represent the 31 108 370 Wearne shares issued to the
vendors when Wearne acquired Portland, the 25 000 000 Wearne shares
acquired by the vendors pursuant to the rights offer concluded in January
2010 and an additional 508 000 Wearne shares acquired by the vendors in the
open market.
The beneficial shareholdings in Wearne of Messrs Heyns and Scholtz will
reduce by 28 308 185 shares each as a result of the transaction.
2. BACKGROUND AND RATIONALE FOR THE TRANSACTION AND INFORMATION RELATING TO
PORTLAND HOLDINGS
In April 2008, Wearne entered into agreements to acquire the entire issued
share capital of Portland as well as the property. Portland was
established 20 years ago, in the Durbanville area of the Western Cape, and
is a supplier of ready mixed concrete and aggregate, road building material
and concrete products to the construction industry. The acquisition
provided a strategic geographical expansion opportunity to Wearne into the
Western Cape market. In terms of the relevant agreements, Messrs Heyns and
Scholtz were appointed to the Wearne board of directors.
Wearne has been severely affected by the global financial crisis and
collapsing commodity prices have resulted in the cessation of mining
projects and the consequential decline in demand for its products. Wearne
responded to declining sales volumes by putting its marginal and loss-
making operations into "care and maintenance" and downsizing the vehicle
fleet. In addition, and as a result of the recession and the decline in
the residential building market in particular, the performance of certain
of the acquisitions concluded in 2008 and 2009 have been disappointing.
The company reported a headline loss of R28.7 million for the year ended
February 2010, which results included an impairment charge of R25.7 million
relating to goodwill arising, inter alia, on the acquisition of Portland.
The Western Cape construction market, in which Portland operates, was
especially affected by this downturn.
The directors have accordingly decided that the transaction is in the best
interest of the company as it will assist in the streamlining of its
operations as well as reducing debt and working capital requirements.
The cash proceeds of the transaction will be utilised by Wearne for the
reduction of debt and for working capital. The sale shares will be
cancelled.
3. RESTRAINTS
Wearne has agreed that it shall not, for a period of one year from the
effective date, be directly or indirectly interested in, engaged or
concerned, either as principal, agent, partner, representative,
shareholder, consultant, adviser, financier, administrator or in any other
like capacity in any business ("the competitive business"):
- carried on within the boundaries of the Western Cape; and
- which carries on business in competition with Portland; or
- which carries on business which is the same as or similar to that of
Portland.
Portland and each of its subsidiaries have agreed that they shall not, for
a period of one year from the effective date, be directly or indirectly
interested in, engaged or concerned, either as principal, agent, partner,
representative, shareholder, consultant, adviser, financier, administrator
or in any other like capacity in any business ("the competitive business"):
- carried on outside of the boundaries of the Western Cape; and
- which carries on business in competition with Wearne; or
- which carries on business which is the same as or similar to that of
Wearne.
4. SUSPENSIVE CONDITIONS AND EFFECTIVE DATE
The transaction is subject to:
- Scholgard obtaining a loan on security of a first mortgage bond over
the property in the amount of R30 million, 30 days from signature date
of the agreements from a financial institution, together with a
further loan of R3 million as working capital;
- Anco, Willchrest or PRT shall, within a period of 30 days after the
signature date of agreements, obtain the necessary finance from a
financial institution in order to procure the release of Wearne from
the various suretyships totalling R10 985 000 as referred to in
agreements;
- by not later than 31 December 2010, the shareholders of Wearne
approving the necessary special and ordinary resolutions in order to
approve and implement the transaction in accordance with the
provisions of the Companies Act and the Listings Requirements and the
necessary special resolution/s are duly registered.
- within 14 days of the signature date of the agreements, Oak View
Investments 11 (Pty) Ltd ("Oak View") shall afford Portland, or its
nominee, an option to purchase from Oak View all of the shares held by
Oak View in Phatutshelo Aggregates and Readymix (Pty) Limited
("Phatutshelo") and all of Oak View`s claims on loan account against
Phatutshelo; and
- within 14 days of the signature date of the agreements, Oak View shall
afford Portland, or its nominee, an option to acquire from Oak View
all of the shares held by Oak View in the share capital of Portland
Empowerment (Pty) Limited.
The effective date of the transaction is the first business day after the
suspensive conditions relating to the transaction have been fulfilled or
waived.
5. CATEGORISATION OF THE TRANSACTION AND CIRCULAR TO SHAREHOLDERS
The transaction is categorised, in terms of the Listings Requirements, as a
Category 1 transaction as well as a related party transaction and involves
a specific repurchase of securities. Accordingly, shareholders` approval
of the transaction and an independent opinion relating to the fairness
thereof is required in terms of the Listings Requirements.
A circular, containing a notice of general meeting of shareholders, will be
dispatched to shareholders in due course.
6. PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTION
The unaudited pro forma financial effects of the transaction will be
announced in due course.
7. FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are advised to continue to exercise caution when dealing in
the company`s securities until a further announcement, containing the
financial effects of the transaction, is made.
Randburg
15 October 2010
Designated adviser
Vunani Corporate Finance
Legal adviser
Fluxmans Inc
Independent expert
BDO Corporate Finance (Pty) Limited
Date: 15/10/2010 10:52:01 Produced by the JSE SENS Department.
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