| Fri 8 Jul 2011, 13:26 | | BIK - Brikor Limited - Financial effects of the disposal of the Stanger Business |
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BIK
BIK
BIK - Brikor Limited - Financial effects of the disposal of the Stanger Business
and withdrawal of cautionary announcement
Brikor Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1998/013247/06)
(Share Code: BIK ISIN Code: ZAE000101945)
("Brikor" or "the Company")
FINANCIAL EFFECTS OF THE DISPOSAL OF THE STANGER BUSINESS AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Shareholders are referred to the announcement released on SENS on 19 May
2011, where it was announced that Brikor had entered into a Sale Agreement,
subject to certain conditions precedent, for the sale of the operations of
Stanger Brick and Tile on 11 March 2011. As the conditions precedent were
not fulfilled by the stipulated time, the parties entered into new
agreements on 10 June 2011, containing substantially similar terms to the
original Sale Agreement ("the transaction").
The transaction encompasses the sale of the following:
1.1 the Stanger business as a going concern which is conducted by Brikor
under the name and style of Stanger Brick and Tile, Zululand Quarries,
Tugela and Ballito Ready Mix, Natal Sand Supplies and Stanbrik Roof
Tiles;
1.2 the Stanger immovable properties; and
1.3 the Stanger Mining Rights which are held by the Stanger companies,
Hanis Investments (Pty) Ltd and Natal Sand Supplies (Pty) Ltd.
The above are collectively hereafter referred to as "Stanger Brick and
Tile".
2. BACKGROUND INFORMATION
Brikor is a manufacturer and supplier of clay bricks, roof tiles, clay
pipes and pavers as well as ancillary products and a producer of coal to,
in particular, the power suppliers. The company recently entered into a
comprehensive restructuring programme to restore operations to
profitability and to strengthen its financial position. Fundamental to the
restructuring programme, was regaining focus on core operations. Certain
assets and operations, such as Stanger Brick and Tile, were identified as
non-core to the main business of Brikor and thus the decision to dispose of
them.
3. RATIONALE FOR THE DISPOSAL
The sale of Stanger Brick and Tile is in line with Brikor`s strategy to
strengthen the group`s cash resources as well as improving its current debt
burden.
4. TERMS AND CONDITIONS OF THE DISPOSAL
4.1 On 10 June 2011, Brikor entered into a Sale of Business Agreement for
the sale of the operations of Stanger Brick and Tile to Huntrex 305
(Pty) Limited ("purchaser") and a Sale of Property Agreement in
respect of certain immovable properties, also to the purchaser, which
sales are indivisible.
4.2 The purchase price payable for Stanger Brick and Tile is the aggregate
of R 50 million plus an amount of certain liabilities of Stanger Brick
and Tile that will be taken over by the purchaser.
4.3 The purchase price will be payable as follows:
4.3.1 R 30 million in cash to the financiers of Brikor, Rand Merchant
Bank and FNB Commercial, divisions of FirstRand Bank Limited, on
behalf of Brikor; and
4.3.2 the balance of R 20 million will be granted as a loan by Brikor
to the purchaser. The loan granted will bear interest at the
prime rate plus 1% and will be repayable in seventy two monthly
instalments commencing four months from the effective date of the
transaction.
4.4 The loan granted by Brikor will be secured through the cession by the
purchaser of its debtors book, registration of a special notarial
covering bond over its stock in trade and mineral rights as well as
the pledge and cession of the shares in and claims against the
purchaser.
5. CONDITIONS PRECEDENT
The disposal is conditional upon the following outstanding conditions
precedent:
5.1. the purchaser entering into Service Agreements with the key personnel
of Stanger Brick and Tile;
5.2. approval of the transaction by the board of Brikor;
5.3. approval of the transaction and the release of the Brikor securities
held by the financiers of Brikor, FirstRand Bank Limited, as security
over Stanger Brick and Tile upon receipt of a bank guarantee for R 30
million payable in cash;
5.4. expiration of 30 days after the publication of notices in terms of the
Insolvency Act; and
5.5 approval of the transaction by the shareholders of Brikor in terms of
section 112 of the Companies Act No 71 of 2008.
5.6 obtaining all required regulatory approvals.
6. UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE DISPOSAL
The unaudited pro forma financial effects set out below are provided for
illustrative purposes only to provide information about how the acquisition
may have impacted on Brikor`s results and financial position. Due to the
nature of the unaudited pro forma financial effects, it may not give a fair
presentation of the company`s results and financial position after the
acquisition. The unaudited pro forma financial effects are based on the
reviewed annual financial information of Brikor at 28 February 2011. The
directors of Brikor are responsible for the preparation of the unaudited
pro forma financial effects.
Before the Pro forma % Change
acquisition After the
reviewed disposal
annual unaudited
28 February 28 February
2011 2011
Loss per share (cents) (34,90) (26,84) 23%
Headline (loss)/ earnings per (6,60) 0,91 114%
share (cents)
Net asset value per share 5,25 5,65 (8%)
(cents)
Net tangible asset value per 4,20 4,59 (9%)
share (cents)
Weighted average shares in 627 274 627 274
issue (`000)
Shares in issue at period end 629 342 629 342
(`000)
Notes:
(1) The "Before the acquisition" column has been extracted without
adjustment, from the reviewed annual results of Brikor for the year
ended 28 February 2011.
(2) The unaudited pro forma financial effects on the results were prepared
on the basis that the acquisition was completed on 1 March 2010.
(3) The "After the disposal" basic loss per share and headline earnings
per share have been adjusted to include the following:
- The results for Stanger Brick and Tile for the year were
excluded;
- Transaction costs of R750 000 were written-off as an expense;
- Interest earned on the R 20 million loan granted was calculated
at prime plus 1% for the year;
- Interest on the Rand Merchant Bank loan were calculated on the
reduced outstanding capital amount taking into account the R 30
million cash received and utilised to repay the loan.
(4) The unaudited pro forma financial effects on the financial position
were prepared on the basis that the acquisition was completed on 28
February 2011.
(5) The "After the disposal" net asset value and net tangible asset value
per share have been adjusted to include the following:
- The total assets and liabilities of Stanger Brick and Tile as at
28 February 2011 were excluded;
- Transaction costs of R750 000 were written off as an expense;
- The R 20 million loan granted as partial funding of the sale;
- The R 30 million cash received on the sale was set off against
the RMB loan;
- A profit of R3,3 million was recorded on the sale.
7. CATEGORISATION OF THE TRANSACTION AND CIRCULAR TO SHAREHOLDERS
The transaction is categorised, in terms of the JSE Limited`s Listings
Requirements, as a Category 1 transaction and requires shareholders`
approval. Accordingly, a circular, containing a notice of a general meeting
of shareholders, will be dispatched to shareholders in due course.
8. FURTHER ANNOUNCEMENT
Shareholders will be notified once the transaction becomes unconditional.
9. SALE OF DONKERHOEK OPERATIONS
As announced on SENS on 11 February 2011 and 19 May 2011, Brikor also
entered into heads of agreement with The Corne Kruger Family Trust, for the
sale of the operations in Donkerhoek together with the immovable property
as a going concern for an amount of R40,6 million. The heads of agreement
has expired and the parties did not enter into formal agreements.
Brikor is currently focussing on improving the operations at Donkerhoek to
return it to profitability, but will remain open for any future offers.
10. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Caution is no longer required to be exercised by shareholders when dealing
in their Brikor securities.
Midrand
08 July 2011
Designated Adviser
Exchange Sponsors
Date: 08/07/2011 13:26:44 Produced by the JSE SENS Department.
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