| Fri 10 Dec 2010, 13:02 | | AND - Andulela Investment Holdings Limited - Acquisition by Andulela of Pro-Roof |
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AND - Andulela Investment Holdings Limited - Acquisition by Andulela of Pro-Roof
Steel Merchants and further cautionary announcement
ANDULELA INVESTMENT HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1950/037061/06)
Share code: AND ISIN: ZAE000125894
("Andulela" or "the company")
ACQUISITION BY ANDULELA OF PRO-ROOF STEEL MERCHANTS AND FURTHER CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION
Shareholders are referred to the cautionary announcements dated 23
September 2010 and 3 November 2010, and are advised that an agreement ("the
agreement") has been entered into between the company and the trustees for
the time being of The Rafik Mohamed Family Trust ("the seller") in terms of
which Andulela will acquire the entire issued share capital of Pro Roof
Steel Merchants (Pty) Limited ("Pro Roof Steel") and all claims that the
seller may have against Pro Roof Steel on the effective date ("the
transaction").
2. BACKGROUND INFORMATION
Pro Roof Steel started as a roofing company in 1988, but has since expanded
its product range to most steel products commonly used in the various
markets it operates in.
Pro Roof Steel`s products and services include:
- welded beam line (universal columns/beams and T-beams);
- roofing solutions(corrugated, inverted box rib, widespan, concealed
fixed);
- fencing and wire products;
- tubing and cold formed;
- flat and long products; and
- value added services (slitting, cut-to-length, blanking, de- and
recoiling, guillotine, tube saw).
Pro Roof Steel employs approximately 700 staff throughout its six service
and steel processing centres situated in Vereeniging, Cape Town, Durban,
Nelspruit, Polokwane and Rosslyn.
Mr Rafik Mohamed, the founder and current chief executive officer of Pro
Roof Steel was a finalist in the best entrepreneur category of the South
African leg of the 2009 Ernst & Young World Entrepreneur Awards.
3. RATIONALE FOR THE TRANSACTION
Andulela is an investment holding company, listed in the Financials,
Investment Instruments - Equities Sector of the Main Board of the JSE
Limited ("JSE"). Currently it owns a controlling interest in Kilken
Platinum (Pty) Limited, a platinum group metals ("PGM") tailings
retreatment facility that delivers PGM concentrate to Rustenburg Platinum
Mines Limited, as its only asset. In line with management`s strategy to
diversify the investment base of the company into growth markets, the
investment in Pro Roof Steel has been identified as a suitable investment
for the company.
4. PURCHASE CONSIDERATION
The purchase consideration of a maximum of R252 million and a minimum of
R168 million, based on the consolidated tangible net asset value ("NAV") of
Pro Roof Steel and its subsidiaries, will be settled by the issue of a
maximum of 630 million and a minimum of 420 million Andulela shares, as the
case may be, at a total issue price of 40 cents per share. The purchase
consideration is determined on the assumption that the NAV of Pro Roof
Steel as at the effective date is not less than R168 million ("the
represented NAV").
The purchase price will be adjusted on a pro rata basis, up to a maximum of
20% in excess of R210 million upwards based on the effective date accounts
of Pro Roof Steel.
The purchase consideration will be apportioned firstly towards the claims
the seller may have against Pro Roof Steel and taken over by the company,
if any, and the balance to the issued share capital in Pro Roof Steel
acquired from the seller. Such number of the Andulela shares which is
equal in value to 80% of the anticipated NAV (being R168 million in value),
will be issued to the seller on the closing date of the transaction, and
the balance of the purchase consideration shares will be issued as soon as
practical after the closing date once the effective date accounts have been
finalised and the NAV has been confirmed.
The transaction is subject to warranties that are normally applicable to a
transaction of this nature.
5. EFFECTIVE DATE
The transaction will become effective on the first business day after
satisfaction or waiver of the last of the suspensive conditions set out in
paragraph 6 below. The effective date is expected to be 1 March 2011.
6. SUSPENSIVE CONDITIONS
The transaction is conditional upon the fulfilment of the suspensive
conditions, that by no later than 17h00 on:
- 31 December 2010, Andulela confirms to the seller in writing that it
has completed its due diligence and that it is satisfied with the
findings thereof;
- by 31 December 2010, if applicable, any third party consent required
for the change in control in Pro Roof Steel is obtained in writing
from such third party or such third party waives its rights in
writing;
- 31 January 2011, Pro Roof Steel acquires all the shares and claims in
and against the subsidiary companies in respect of which it is not
already the registered and/or beneficial owner;
- 31 January 2011, Pro Roof Steel and/or the subsidiary companies
complete and/or implement their restructure such that:
- all operating assets and businesses (including without limitation
ownership of the steel business operations previously conducted
by Pro Roof Steel Merchants (VRN) (Pty) Limited) has
unconditionally been transferred to Pro Reef Steel (VRG) (Pty)
Limited and are in fact held by the subsidiary companies; and
- the relevant agreements giving effect to the finance and/or
security aspects relating to the debts of Pro Roof Steel are
rendered unconditional on their terms, save for any reference
therein to the agreement;
- 31 January 2011, the subsidiary companies conclude written lease
agreements in relation to their current operating premises, on terms
and conditions as are reasonably acceptable to Andulela
- 28 February 2011, all requisite regulatory consents and/or
authorisations required are obtained, including those from;
- the Securities Regulation Panel, if applicable; and
- the competition authorities in terms of the Competition Act;
- 28 February 2011, Pro Roof Steel concludes a restructuring of the
funding facilities with Investec Bank Limited on terms and conditions
acceptable to Andulela, and such funding agreement becomes
unconditional as to its terms;
- 09 March 2011, if applicable any JSE and/or shareholder approval that
may be required are obtained;
7. CLASSIFICATION OF THE TRANSACTION
The transaction is classified as a Category 2 transaction in terms of the
Listings Requirements of the JSE Limited ("Listings Requirements"). In
terms of the transaction, Pro Roof Steel will become a subsidiary of
Andulela and Andulela will ensure that Pro Roof Steel`s Articles of
Association are amended to conform to the Listings Requirements.
8. FINANCIAL EFFECTS AND FURTHER CAUTIONARY ANNOUNCEMENT
The unaudited pro forma financial effects, for which the directors are
responsible, are provided for illustrative purposes only to show the effect
of the transaction on earnings and headline earnings as if the transaction
had taken effect on 1 January 2010 and on net asset value and net tangible
asset value per share as if the transaction had taken effect on 30 June
2010. Because of their nature, the unaudited pro forma financial effects
may not give a fair presentation of the company`s financial position and
performance. The unaudited pro forma financial effects have been compiled
from the unaudited consolidated financial statements for the year ended 30
June 2010 and are presented in a manner consistent with the format and
accounting policies adopted by the company and have been adjusted as
described in the notes below:
Movement
Reviewed Unaudited Unaudited (c) (%)
Before Adjusted After the
the Before transact
transact the tion
tion transact
tion
Earnings per share -20.29 -22.42 -14.07 8.35 37.26
(cents)
Headline earnings per -1.11 -1.11 -0.95 0.16 14.68
share (cents)
Net asset value per share 7.76 7.76 12.20 4.43 57.13
(cents)
Net tangible asset value -2.84 -2.84 1.94 4.78 168.51
per share (cents)
Weighted average number 1,009,223 1,009,223 1,639,223
of shares in issue
(000`s)
Shares in issue at year 3,950,660 3,950,660 4,580,660
end (000`s)
Notes:
1. The "Reviewed Before the transaction" column reflects the 2nd period
reviewed interim results of Andulela for the 12 months ended 30 June
2010.
2. The "Unaudited Adjusted Before the transaction" column reflects the
reviewed interim results of Andulela for the 2nd six month period
ended 30 June 2010, following the change of the year end of the
company from 30 June to 31 December. This was calculated by extracting
the actual results for the period 1 January 2010 to 30 June 2010.
3. Net asset and tangible net asset value calculations were completed
assuming the transaction was concluded at the balance sheet date of 30
June 2010.
4. The unaudited interim results of Pro Roof Steel for the six months
ended 31 August 2010 has been extracted from the unaudited management
accounts of Pro Roof Steel for the above period. Management of
Andulela has satisfied themselves with the quality of the management
accounts.
5. The pro forma financial effects in the "Unaudited After the
transaction" column are based on the following assumptions:
- 630 000 000 ordinary shares were issued on 1 January 2010 to the
seller for a total value of R252 000 000.
- The net loss after tax attributable to Pro Roof Steel for the six
months ended 31 August 2010 amounted to R2 827 663;
- The Tangible net asset value attributable to Pro Roof Steel as at
31 August 2010 amounted to R201 055 000, and goodwill of R50 946
000 was raised as a result of the transaction; and
- Once-off transaction costs of R1,500,000 were provided for.
6. The "Movement" column has been calculated with reference to the
"Unaudited Adjusted Before the transaction" column.
9. WITHDRAWAL AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
The cautionary announcement relating to the above acquisition is hereby
withdrawn.
Shareholders are advised that the company is involved in negotiation which
may have an effect on the price at which the Company`s securities trade on
the JSE Limited. Accordingly, shareholders are advised to continue
exercising caution when dealing in the Company`s securities until a further
announcement is made.
Johannesburg
10 December 2010
Corporate adviser and transaction sponsor
Vunani Corporate Finance
Sponsor
Investec Bank Limited
Attorneys
Glyn Marais Incorporated
Date: 10/12/2010 13:02:02 Produced by the JSE SENS Department.
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