| Thu 15 Feb 2001, 0:00 | | Wooltru - Disposal Of Consolidated News Agemcies ( |
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WOOLTRU LIMITED
Incorporated in the Republic of South Africa
(Registration number 1936/008278/06)
("Wooltru")
DISPOSAL OF CONSOLIDATED NEWS AGEMCIES HOLDINGS (PTY) LIMITED ("CNA")
Further to the cautionary announcement published on 15 December 2000 and as
renewed on 26 January 2001, Wooltru Limited ("Wooltru") is pleased to announce
that it has reached agreement for the sale of its equity in and other claims
against CNA. The sale is for a consideration of R150 million to Gordon Kay &
Associates (Pty) Limited. The sale will be effective from 1 March 2001, and is
conditional only upon formal lodging of securities for payment of the purchase
consideration, as described hereunder, and approval by the competition
authorities.
The turnaround within CNA is continuing, assisted by a successful
implementation of the new management information systems on 1 October 2000. The
return to acceptable levels of profitability is progressing well, and is
anticipated in the medium term. However, in the context of its stated intention
to unbundle, Wooltru needs to focus on the short term realisation of value.
Accordingly, the Board believes that the offer was appropriate and that the
sale of CNA is in shareholders' best interests.
The sale of its interest in CNA brings to an end a period of uncertainty for
CNA's stakeholders, including staff, suppliers and customers.
Purchasers
Gordon Kay & Associates (Pty) Limited is owned by Mark Gordon and Anthony Kay,
who also own Africa East Coast Corporation, a company registered in the
Seychelles. The group has interests in a number of ventures in South Africa,
Zambia, Tanzania, the Comores and the Seychelles, primarily in infrastructure
and information technology. Mark Gordon and Anthony Kay will bring to CNA their
unique blend of skills, enthusiasm, and entrepreneurial ability. Their plans
are to continue to develop the strategy aimed at a rapid operational turn
around of the business, and are fully supported by the existing executive
management team.
Consideration
The consideration is to be settled by means of a combination of cash and
guarantees secured as follows:
- R15,4 million in cash, payable on the closing date;
- R84,6 million in cash, payable on 30 May 2002, to be secured by commercial
bank guarantees; and
- R50 million in cash, payable on 30 May 2002, to be secured by a pledge over
equity within the new CNA group.
Financial Effects
In the year ended 30 June 2000, CNA contributed a loss of R38 million to the
consolidated headline earnings of Wooltru and CNA's net assets amounted to R123
million in Wooltru's consolidated balance sheet as at that date. In addition,
on 30 June 2000, CNA had borrowings due to the Wooltru group amounting to R206
million.
The pro forma impact on Wooltru's headline earnings per share and net assets
per share, calculated using the assumptions set out below, is:
As reported at Pro forma at % Change
30 June 2000 30 June 2000
after the sale of
CNA
(cents) (cents)
Headline earnings per share
(from continuing operations) 57,9 65,3 12,8
Net assets per share 546,3 507,9 (7%)
The effect on headline earnings per share is calculated by assuming that CNA
was sold on 1 July 1999, and that the full sale proceeds were received on that
date. Interest is assumed to have been earned on the proceeds at a before tax
rate of 12% for the full year ended 30 June 2000. This is offset against the
interest that was borne by CNA, but would, subsequent to the sale, have been
borne by Wooltru.
The effect on net assets per share assumes that the sale took place on 30 June
2000, and the proceeds were received on that date. The calculations take
account of the exceptional losses, which would have then been realised.
Cape Town
16 February 2001
Financial advisors to Wooltru
CAZANOVE South Africa (Pty) Limited
(Registration number 98/11736/07)
Registered sponsor and
Member of the JSE Securities Exchange South Africa
Sponsor to Wooltru
Merrill Lynch South Africa (Pty) Ltd
Registered sponsor and
Member of the JSE Securities Exchange South Africa
Registration number 1995/001805/07
Legal advisors to Wooltru
Mallinicks Attorneys
Legal advisers to the Purchasers
Thomson-Wilks
Attorneys, Notaries & Conveyancers
