| Mon 22 Nov 2010, 7:47 | | PSV - PSV Holdings Limited - Acquisition by PSV of Turbo Agencies (Pty) Limited |
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PSV
PSV
PSV - PSV Holdings Limited - Acquisition by PSV of Turbo Agencies (Pty) Limited
and further cautionary announcement
PSV HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/004365/06)
JSE code: PSV
ISIN: ZAE000078705
("PSV" or "the company")
ACQUISITION BY PSV OF TURBO AGENCIES (PTY) LIMITED AND FURTHER CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION
Shareholders are referred to the cautionary announcements, the last of
which was dated 25 October 2010, and are advised that a Sale Agreement has
been entered into between the company and Earthwize Environmental Services
(Proprietary) Limited ("EWS`), Keith and Carol Parry ("the Parry`s"), Turbo
Agencies (Proprietary) Limited ("Turbo"), Turbo Agencies Zambia Limited and
Turbo Agencies (DRC) SPRL ("the agreement"). In terms of the agreement,
PSV will acquire the entire issued share capital of Turbo and all claims on
the effective date for a consideration of R24 million ("the transaction").
2. BACKGROUND INFORMATION
Turbo supplies tooling and equipment to the mining, engineering and
automotive industries in Botswana, Zambia and the Democratic Republic of
Congo ("DRC").
3. RATIONALE FOR THE TRANSACTION
The transaction will extend PSV`s African footprint. Although PSV and
Turbo have certain common clients, PSV will be able to leverage off Turbo`s
customer network with the range of PSV products. PSV`s products will also
boost the product range for Turbo across Botswana, Zambia and the DRC.
4. PURCHASE CONSIDERATION
The purchase consideration of R24 million will be settled as to R12 million
to EWS and R12 million to the Parrys as follows:
Settlement of the EWS portion:
* The R12 million payable to EWS will be financed via a vendor financed
loan payable over five years at prime plus one percentage point as
follows:
* Interest only shall be paid monthly in advance for the period 1 March
2011 until 29 February 2012;
* R10 million, together with interest thereon, will be paid to EWS in 48
monthly instalments, commencing on 1 March 2012;
* The balance of R2 million, together with interest thereon, will be
paid to EWS on 1 March 2016.
Settlement of the Parrys` portion of R12 million is subject to profit warranties
and will be settled by the issue of PSV shares at a price equal to the 30 day
volume weighted average price at the due date for payment of the instalment
concerned as follows:
R4 million payable on receipt of an audit certificate reflecting the profit
after tax ("PAT") of at least Pula 5 454 000for the period 1 March 2010 to 28
February 2011;
* R4 million payable on receipt of an audit certificate reflecting the
PAT of at least Pula 6 000 000 for the period 1 March 2011 to 29
February 2012; and
* R4 million payable on receipt of an audit certificate reflecting the
PAT of at least Pula 6 636 000 for the period 1 March 2012 to 28
February 2013.
* Any excess or shortfall in the PAT will be cumulative until 28
February 2013, save that the maximum of the Parrys` portion shall
never exceed R12 million.
If the net tangible asset value of Turbo at the effective date is less than Pula
13 million, the Parrys` portion will be reduced by an amount equal to the
shortfall.
If there is a shortfall in the PAT, the instalment payable will be reduced in
terms of a formula set out in the agreement.
5. EFFECTIVE DATE
The transaction will become effective on 1 March 2011 subject to the
successful fulfilment of the conditions precedent set out in paragraph 6
below.
6. CONDITIONS PRECEDENT
The transaction is conditional, inter alia, upon:
approval from the shareholders of PSV being received by no later than 28
February 2011;
approval in terms of the Competition Act, Act No. 89 of 1998 and any other
regulatory approvals required being received by no later than 15 February
2011; and
the sale of certain immovable property situated in Gaborone, Botswana to
Duneton (Proprietary) Limited by no later than 15 February 2011.
7. CLASSIFICATION OF THE TRANSACTION
The transaction is classified as a Category 1 transaction in terms of the
Listing Requirements of the JSE Limited ("Listings Requirements").
In terms of the transaction, Turbo will become a subsidiary of PSV and PSV will
ensure that Turbo`s Articles of Association are amended to conform to the
Listings Requirements.
8. FINANCIAL EFFECTS AND FURTHER CAUTIONARY ANNOUNCEMENT
The financial effects of the transaction will be published in due course
and shareholders are advised to continue exercising caution when dealing in
the company`s securities until such time as the financial effects of the
transaction are published.
Johannesburg
22 November 2010
Corporate Adviser and Designated Adviser
Vunani Corporate Finance
Date: 22/11/2010 07:47:37 Produced by the JSE SENS Department.
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