| Tue 10 Sep 2002, 0:00 | | Wooltru Limited - Acquisition Of Property And Rene |
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Wooltru Limited - Acquisition of property and renewal of cautionary announcement
Wooltru Limited
(Incorporated in the Republic of South Africa)
(Registration number 1936/008278/06)
("WOOLTRU")
Share Code: WLO ISIN Code: ZAE000007993
Share Code: WLN ISIN Code: ZAE000008744
Share Code: WLOP ISIN Code: ZAE000008009
Share Code: WLP1 ISIN Code: ZAE000008017
Acquisition of property and renewal of cautionary announcement
Acquisition of Property
Wooltru has concluded an agreement to acquire a property ("Jet Park") situated
at Erf 448 Jet Park Extension 14, measuring 6.9081 hectares and including
permanent improvements erected on the site. The purchase consideration is R32.4
million, payable upon transfer of title to the property.
Although Jet Park is leased to Consolidated News Agencies (Pty) Limited, ("CNA")
in terms of a lease agreement that terminates in 2011 (the "CNA lease"), the CNA
lease was specifically excluded from the sale of CNA to Gordon Kay & Associates
(Pty) Limited in February 2001. Wooltru had guaranteed the CNA lease (the
"Guarantee") at the time the lease was entered into, at which time CNA was a
wholly owned subsidiary of Wooltru.
Jet Park has subsequently been sub-let to Universal Product Networks (Pty)
Limited ("UPN"), a subsidiary of Woolworths, until 30 June 2006 (the "Sub-
lease"). Woolworths has issued a surety in favour of Wooltru, in respect of
UPN`s obligations under the Sub-lease. The present value of the rentals due
under the Sub-lease is approximately R10.1 million.
Wooltru, however, remained exposed to the remainder of the lease period not
covered by the Sub-lease (the "Uncovered period").
The owner of Jet Park has offered to release Wooltru from the Guarantee, at a
cost of R28,0 million to Wooltru. As Wooltru would be unable to apply for
liquidation until the contingent liability arising from the Guarantee is
eliminated, and because the offer from the owner is considered expensive,
Wooltru has actively sought alternative ways to eliminate the contingent
liability. After considering a number of alternatives, Wooltru believes that the
purchase and subsequent sale of the property is in the best interests of Wooltru
shareholders.
Upon the transfer of title of Jet Park to Wooltru, Wooltru will terminate the
Guarantee, thereby releasing it from the contingent liability arising from the
Guarantee. Wooltru will then seek to dispose of Jet Park and a further
announcement in this regard will be made in due course. It is expected that the
sale of Jet Park will result in a loss to Wooltru. However, this loss is
anticipated to be less than the cost of obtaining a release from the Guarantee.
The sale of the property had not been concluded at the time of the release of
the audited results for the period ended 30 June 2002 (the "results"). However,
the possibility thereof had been identified. As a result, the results included
a R19.5 million provision for the loss on purchase and resale of Jet Park. This
was considered the most appropriate means of estimating the present value of the
contingent liability associated with the Uncovered period. The total contingent
liability of R38.6 million is disclosed in the results.
The minimum recoverable value of the property was set in the audited group
results for the year ended 30 June 2002 at a level of R12,9 million. Wooltru
has, subsequent to the release of the June 2002 results, received a third party
property valuation which values the unencumbered Jet Park property at R6.0
million, and the Sub-lease at R10.1 million giving a total value of R16,1
million. This valuation may not give an accurate indication of the actual price
at which the property will be sold. Taking into consideration rental that would
be earned by Wooltru between the date of purchase and sale of Jet Park, as well
as interest foregone on the cash utilised for the purchase, the change in the
value of the remaining period of the Sub-lease during the period between
purchase and sale, and the uncertainty relating to the ultimate timing and sale
price of the property, Wooltru considers that the provision of R19,5 million
remains appropriate.
Consequently, the purchase of Jet Park is not expected to have a material impact
on Wooltru`s net asset value and earnings per share, as published in the audited
group results for the year ended 30 June 2002.
A further announcement will be made as soon as a binding agreement for the sale
of JET Park is obtained, at which time the actual financial effects of the
purchase and sale of Jet Park will be determined and advised. In addition, a
circular providing further detail will be posted to shareholders in due course.
Renewal of Cautionary Announcement
Further to the cautionary announcement dated 26 July 2002, relating to CNA,
shareholders are advised that the liquidators of CNA are currently in the
process of conducting an inquiry in terms of section 417 of the Companies Act
into the circumstances surrounding the CNA liquidation. This includes an
examination of the circumstances at the time of the sale of CNA by Wooltru to
Gordon Kay & Associates (Pty) Limited. Further information will be provided once
this inquiry has been conlcuded.
In the interim, shareholders are advised to continue to exercise caution in
dealing in their Wooltru Ordinary and "N" Ordinary shares.
Cape Town
10 September 2002
Financial Adviser and Sponsor
Cazenove
Date: 10/09/2002 03:13:33 PM Produced by the JSE SENS Department
