| Wed 21 Nov 2001, 0:00 | | Wooltru Limited - Proposed Unbundling And Further |
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Wooltru Limited
(Registration number 1936/008278/06)
(Incorporated in the Republic of South Africa)
("Wooltru" or "the Company")
Share Code: WLO ISIN Code: ZAE000007993
Share Code: WLN ISIN Code: ZAE000008744
Share Code: WLOP ISIN Code: ZAE000008009
Share Code: WLP1 ISIN Code: ZAE000008017
Proposed unbundling and further cautionary announcement
Further to the information provided in the preliminary report and the
cautionary announcement on 10 October 2001, Wooltru is pleased to be able to
provide a further update on the proposed unbundling.
Affinity Logic
Wooltru has reached agreement in principle for the sale of its interest in
Affinity Logic Holdings (Pty) Limited ("Affinity") to the management of
Affinity, supported by Datatec Limited ("Datatec"), who currently own 47.4%
of Affinity. The consideration is approximately R 45,0 million in cash,
with a further approximately R 5,0 million due on 30 June 2002, contingent
upon the achievement of certain turnover by Affinity for the year ended 31
March 2002. Affinity is carried at a value of R44,1 million in Wooltru's
books at 30 June 2001.
The agreement in principle requires formal signature of a definitive
contract of sale and other appropriate documentation.
Property Transactions
The Kensington retail development opened on schedule in late October and the
transfer took place on the 20th of November. The proceeds of R100,0 million
have been received and have been applied to the reduction of Wooltru's
borrowings.
The remainder of the portfolio is valued at R104,7 million. Of this amount,
offers for R39,0 million have been accepted and transfers are in various
stages of progress. At least R15,0 million of the R39,0 million is expected
to have been received before the end of December 2001 with the balance
shortly thereafter.
Of the remainder of the portfolio, valued at R65,7 million, offers have been
received in respect of R50,7 million and are currently being considered.
Topics
Wooltru has commenced with a formal process to deal with its investment in
Topics (Pty) Limited.
Working capital position
As at the 20th of November Wooltru's borrowings stood at R67,8 million. In
addition to this debt, it is expected that expenditure of a further R95,0
million will be necessary to cover costs and liabilities to the date of the
final liquidation of Wooltru, which include, interest, operating costs, fees
and closure costs.
Expected inflows include R104,7 million from property sales; receipts from
the disposal of Wooltru's interest in certain liquid investments valued at
R148,0 million; balance of proceeds from the sales of CNA, being R15,0
million at the end of December 2001 and R50,0 million on 31st May 2002;
R45,0 million from the sale of the shareholding in Affinity Logic, and the
proceeds from the eventual disposal of Topics.
Tax clearance
By 15 November 2001 all the Houses of Parliament had approved the Second
Revenue Laws Amendment Bill, 2001 (Bill 84 - 2001) (the "Bill") and it is
awaiting signature by the President before becoming law. The Bill has
resolved a number of uncertainties relating to the tax treatment of the
unbundling and confirms that the distribution of all Wooltru's shares in
Massmart, Truworths International Limited ("Truworths"), and Woolworths
Holdings Limited ("Woolworths") will be exempt of Capital Gains Taxation
and Secondary Taxation on Companies.
STRATE
On the 10 December 2001, Wooltru commences the process of dematerialisation
in order to enter the STRATE environment. This process continues until the
7 January 2002, at which time the first electronic trade in Wooltru shares
will take place. Between these dates, Wooltru may not undertake any
"corporate action", defined as "an action taken by an Issuer or any other
entity or third party which affects the shareholder in terms of entitlements
or notifications". This will preclude any formal action on the unbundling
until at the earliest 8 January 2002.
Implications for the unbundling
Wooltru currently has 198,741,877 Ordinary shares and 277,179,825 "N"
Ordinary shares in issue, and holds 248,361,702 Truworths shares,
410,447,149 Woolworths shares, and 80,438,820 Massmart shares. In
accordance with the rights to dividends and capital, Wooltru intends that
Ordinary and "N" Ordinary shareholders will be treated equally in the
unbundling. It is Wooltru's intention to repay the preference shares at a
future date. In the interim the preference shares will continue to be
serviced.
The progress made since the announcement of the 10 October has provided
sufficient certainty to enable the Board to commit to unbundle 100% of
Wooltru's shares in Massmart, Truworths and Woolworths. Due to the delays in
the introduction of the new enabling legislation, certain requirements of
the legislation and the implementation of STRATE this cannot be implemented
before the 8 January 2002.
At the time of unbundling Wooltru must have sufficient working capital to
meet all remaining obligations as they fall due. The expected cash inflows
referred to above will meet the working capital requirements, thereby
removing the remaining obstacle to the 100% unbundling. Accordingly, the
Board will be meeting again in early December to finalise the timing of such
an unbundling and shareholders should expect a further announcement
thereafter.
Further cautionary announcement
In the interim, shareholders are advised to continue to exercise caution
when dealing in their Wooltru Ordinary and "N" Ordinary shares.
21 November 2001
Financial Advisor
Cazenove
Sponsor
Merrill Lynch
