| Thu 30 Jun 2011, 11:30 | | VUN - Vunani Limited - Acquisition of twenty million shares in BSI Steel Limited |
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VUN
VUN
VUN - Vunani Limited - Acquisition of twenty million shares in BSI Steel Limited
VUNANI LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/020641/06)
JSE code: VUN
ISIN: ZAE000110359
("Vunani" or "the Company" or "the Group")
ACQUISITION OF TWENTY MILLION SHARES IN BSI STEEL LIMITED
1. INTRODUCTION
Shareholders are advised that the Company and Vunani Capital Proprietary
Limited ("Vunani Capital"), a wholly owned subsidiary of the Company, have
entered into an agreement, dated 28 June 2011, with the Longfellow Family
Trust and the Denbigh Family Trust ("the agreement"), in terms of which
Vunani Capital shall acquire 20 000 000 ordinary shares in the share
capital of BSI Steel Limited ("BSI") in exchange for ordinary shares of an
equivalent value in the share capital of the Company ("the transaction").
2. BACKGROUND INFORMATION
In October 2007 Vunani acquired a strategic equity interest in BSI, at the
time it listed on the JSE. This investment was debt funded with financial
guarantees provided by Vunani. Following the global financial crisis and
subsequent restructuring of the Company, the board of Vunani took a
strategic decision to reduce its on-balance sheet gearing and for this
reason the investment in BSI was sold earlier this year.
Despite the decision to sell the investment in BSI the relationship between
the executives of the two companies has remained strong. This has
culminated in the agreement which results in Vunani acquiring an
unencumbered shareholding in BSI.
3. RATIONALE FOR THE TRANSACTION
William Battershill ("WB") is the executive chairman of BSI and its major
shareholder through his family trusts, the Longfellow Family Trust and the
Denbigh Family Trust ("the Battershill Family Trusts"), holding just over
320 000 000 ordinary shares or approximately 45% of the ordinary shares in
issue.
WB and BSI would like to maintain a strong relationship with Vunani and in
order to underpin this, WB has agreed to facilitate the sale of 20 000 000
BSI shares held by the Battershill Family Trusts to Vunani, via its wholly
owned subsidiary Vunani Capital. After the transaction Vunani Capital will
own approximately 3% of the issued ordinary share capital of BSI and the
Battershill Family Trusts will own approximately 5% of the issued ordinary
share capital of Vunani.
Vunani is well acquainted with BSI and wishes to hold an investment in BSI
and contribute to the growth of that company. BSI will improve its BEE
credentials and Vunani will be well-placed to participate in any future
corporate action at BSI, including any future broad based black economic
empowerment transaction.
The terms and conditions of the agreement are set out in paragraph 4 below.
4. PURCHASE CONSIDERATION
The Battershill Family Trusts shall sell 20 000 000 ordinary shares in the
share capital of BSI at a price of 71.994 cents per share, which is based
on BSI`s 30 day volume weighted average price on 8 June 2011, in terms of
the agreement.
The purchase consideration of R14 398 972 shall be settled through the
issue of 239 852 770 ordinary issued shares in the Company ("the Vunani
shares") at a price of 6.0033 cents per share, which is based on the 30 day
volume weighted average price on 8 June 2011, in terms of the agreement.
In terms of the agreement neither party shall be entitled to dispose of the
shares acquired for a period of three years from the date of transfer.
5. EFFECTIVE DATE
The transaction will become effective three days after the fulfilment of
the condition precedent set out in paragraph 6 below.
6. CONDITIONS PRECEDENT
The transaction is conditional upon approval by the JSE of the listing of
the Vunani shares.
7. FINANCIAL EFFECTS
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, headline earnings, diluted earnings and
diluted headline earnings per share 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 31 December 2010. Because
of their nature, the unaudited pro forma financial effects may not give a
fair presentation of the Group`s financial position and performance. The
unaudited pro forma financial effects have been compiled from the audited
consolidated financial statements for the year ended 31 December 2010 and
are presented in a manner consistent with the format and accounting
policies adopted by Vunani and have been adjusted as described in the notes
below:
Movement
Notes Audited Unaudited (cents) (%)
Before the After the
transaction transaction
Loss per share 2 (2.23) (2.11) 0.12 5.4%
(cents)
Headline loss per 2 (2.93) (2.78) 0.15 5.1%
share (cents)
Diluted loss per 2 (2.23) (2.11) 0.12 5.4%
share (cents)
Diluted headline (2.93) (2.78) 0.15 5.1%
loss per share 2
(cents)
Net asset value 2 & 3 5.25 5.29 0.04 0.8%
per share (cents)
Net tangible asset 2 & 3 4.22 4.30 0.08 1.9%
value per share
(cents)
Weighted average 4 282 465 4 522 318
number of shares
in issue (000`s)
Fully diluted
weighted average
number of shares
in issue (000`)
Shares in issue at 4 764 502 5 003 355
year end (000`s)
Notes:
1 The "Audited Before the transaction" column reflects the audited
results of Vunani for the year ended 31 December 2010.
2 The "Unaudited after the transaction" column reflects what the results
would have been had the transaction been effective for the full
financial year. In this regard it is assumed that Vunani acquired 20
million BSI ordinary shares on 1 January 2010 at a price of 71.9949
cents per share. A fair value adjustment was made by valuing the 20
million BSI ordinary shares at the closing share price on 31 December
2010 of 62 cents per share. A dividend paid by BSI in November 2010
of 2 cents per share was also brought to account.
3 Net asset and tangible net asset value calculations were completed
assuming the transaction was concluded at the balance sheet date of 31
December 2010.
8. CLASSIFICATION OF THE TRANSACTION
The transaction is classified as a Category 2 transaction in terms of the
Listing Requirements of the JSE Limited.
Sandton
30 June 2011
Independent Designated Adviser
Grindrod Bank Limited
Joint Designated Adviser
Vunani Corporate Finance
Date: 30/06/2011 11:30:06 Produced by the JSE SENS Department.
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