| Thu 18 Aug 2011, 14:46 | | AET - Alert Steel Holdings Limited - Acquisition of shares in and claims |
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AET
AET
AET - Alert Steel Holdings Limited - Acquisition of shares in and claims
against Alert Steel Northwest and renewal of cautionary announcement
ALERT STEEL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2003/005144/06)
JSE code: AET
ISIN: ZAE000092847
("Alert" or "the company")
ACQUISITION OF SHARES IN AND CLAIMS AGAINST ALERT STEEL NORTHWEST AND RENEWAL
OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Shareholders are referred to the cautionary announcements, of which the
last was dated 4 August 2011, and are advised that Alert has entered
into an agreement ("the Alert Steel Northwest Acquisition") with Alert
Steel Northwest (Pty) Limited ("Alert Steel Northwest"), Capital Africa
Steel (Pty) Limited ("Capital Africa Steel") and the JC Family Trust, in
terms of which Alert will acquire from Capital Africa Steel and the JC
Family Trust all of the shares in Alert Steel Northwest ("Alert Steel
Northwest Sale Shares"), and from Capital Africa Steel all of the claims
on loan account held by Capital Africa Steel against Alert Steel
Northwest (Alert Steel Northwest Sale Claim").
References below to the:
- "Alert NAV Per Share" as at any particular date means, subject to
the proviso below, an amount calculated by dividing the net asset
value of Alert (excluding inter alia the net asset value of Alert
Steel North West, any shareholder loans and any loans outstanding,
including interest thereon, to Capital Africa Steel, that arose
through the implementation of the Alert Steel North West
Acquisition) as at such date by the number of issued ordinary
shares in Alert as at such date, provided that the Alert NAV Per
Share shall never be less than 3,3 cents per share;
- "Alert Steel Northwest Closing Date" means the first business day
following the day on which all of the suspensive conditions as set
out in paragraph 5 have been fulfilled or waived;
- "Alert Steel Northwest Conversion Period" means the period
commencing on the second anniversary of the Alert Steel North West
Closing Date and ending on the third anniversary of the Alert Steel
North West Closing Date; and
- "Alert Steel Northwest Conversion Date" means any date falling
within the Alert Steel North West Conversion Period selected in
writing by Alert and notified by Alert to the Alert Steel North
West Sellers prior to the end of the Alert Steel North West
Conversion Period, provided that, in the event that no such
notification is received by the Alert Steel North West Sellers
prior to the end of the Alert Steel North West Conversion Period,
the Alert Steel North West Conversion Date shall be deemed to be
the third anniversary of the Alert Steel North West Closing Date;
and
- "Alert Steel Northwest Sellers" means Capital Africa Steel and the
JC Family Trust.
2. BACKGROUND AND RATIONALE
Traditionally, Alert operated as a large retailer of prime steel,
building materials, plumbing and hardware products. Alert is however in
the process of returning to its core business which is the selling and
supplying of steel and steel related products and services.
Alert Steel Northwest is a retailer of steel. The location of the
branches within Alert Steel Northwest enables Alert to expand to
Rustenburg, Mafikeng and other rural areas, in the North West province,
which have been identified by Alert as a strong growth area through
branch networking and the container concept. The branches in the North
West province will be utilised as a distribution network for Alert to
expand further into the Northern Cape.
3. EFFECTIVE DATE
The effective date of the Alert Steel Northwest Acquisition will be the
Alert Steel Northwest Closing Date.
4. CONSIDERATION
4.1 Alert will acquire the Alert Steel Northwest Sale Shares on the
Alert Steel Northwest Closing Date for a purchase price equal to
R100 plus a further amount equal to the net asset value of Alert
Steel Northwest (excluding any shareholder loans or interest
accrued thereon) as at the Alert Steel Northwest Conversion Date.
4.2 Alert will acquire the Alert Steel Northwest Sale Claims on the
Alert Steel Northwest Closing Date for a purchase price equal to
the face value of the Alert Steel Northwest Sale Claims.
4.3 On the Alert Steel Northwest Closing Date, Alert shall discharge
the purchase consideration for the Alert Steel Northwest Sale
Claims on loan account by creating a loan account in favour of
Capital Africa Steel ("the Capital Africa Steel Loan Claim") with a
value equal to the face value of the Alert Steel Northwest Sale
Claims as at the Alert Steel Northwest Closing Date. The Capital
Africa Steel Loan Claim will accrue interest at prime plus 2% from
the Alert Steel Northwest Closing Date to the Alert Steel Northwest
Conversion Date.
4.4 On the Alert Steel Northwest Conversion Date, Alert will:
- convert the Capital Africa Steel Loan Claim to shares in
Alert, by issuing to Capital Africa Steel such number of
shares in Alert as have an aggregate subscription price (at
the Alert NAV Per Share) equal to all amounts outstanding to
Capital Africa Steel in respect of the Capital Africa Steel
Loan Claim as at the Alert Steel Northwest Conversion Date
(including accrued interest thereon); and
- discharge the further amounts owing to the Alert Steel North
West Sellers in respect of the Alert Steel Northwest Sale
Shares (as contemplated in paragraph 4.1 above) as at the
Alert Steel Northwest Conversion Date owing by issuing to the
Alert Steel Northwest Sellers such number of shares in Alert
as have an aggregate subscription price (at the Alert NAV Per
Share).
5. SUSPENSIVE CONDITIONS
The Alert Steel Northwest Acquisition is subject to all regulatory
approvals having been obtained, including specifically any approvals
required in terms of the Companies Act, the Competition Act and the JSE
Listings Requirements.
6. CATEGORISATION OF THE ALERT STEEL NORTHWEST ACQUISITION AND CIRCULAR TO
SHAREHOLDERS
The Alert Steel Northwest Acquisition is categorised, in terms of the
JSE Listings Requirements, as a related party transaction. Accordingly,
shareholders` approval of the transaction and an independent opinion
relating to the fairness thereof is required in terms of the JSE
Listings Requirements.
7. CESSION OF SHARES
Alert has undertaken that, with effect from the Alert Steel Northwest
Closing Date, it shall cede in securitatem debiti (and not as an "out-
and-out" cession) to Capital Africa Steel, all of Alert`s rights, title
and interests in and to the Alert Steel Northwest Sale Shares, and
pledge the Alert Steel Northwest Sale Shares to Capital Africa Steel, as
a continuing general covering security, for the due and punctual
performance of all obligations and the due and punctual payment of all
sums of money, which may at any time be or become owing by Alert to
Capital Africa Steel in terms of the Alert Steel Northwest Acquisition.
8. PRO FORMA FINANCIAL EFFECTS OF THE ALERT STEEL NORTHWEST ACQUISITION
Shareholders are referred to the announcements dated 8 February 2011 and
31 March 2011 in which the disposal of the Klerksdorp, Lichtenburg and
Randfontein branches ("the Subject Businesses") to Alert Steel Northwest
and the restructuring of Alert were detailed respectively.
The Alert Steel Northwest Acquisition will not have any material
financial effect on Alert as at 30 December 2010 (which is the date of
the last published financial results), as:
- the Subject Businesses Disposal had no effect prior to or on 31
December 2010; and
- in terms of the Alert Steel North West Acquisition Alert will
acquire the Alert Steel Northwest Sale Shares and the Alert Steel
Northwest Sale Claims, and accordingly the Subject Businesses (now
held by Alert Steel Northwest) will again form part of the Alert
group of companies.
9. FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are advised to continue exercising caution in dealing in
the company`s securities as negotiations are still in progress, which if
successfully concluded, may have a material effect on the price of the
company`s securities.
Pretoria
18 August 2011
Designated Adviser
Vunani Corporate Finance
Date: 18/08/2011 14:46:00 Produced by the JSE SENS Department.
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