| Wed 14 Sep 2011, 8:35 | | AFR - AFGRI Limited - Announcement relating to the disposal by GroCapital |
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AFR
AFR
AFR - AFGRI Limited - Announcement relating to the disposal by GroCapital
Financial Services Proprietary Limited of its farmer lending book to the Land
and Agricultural Development Bank of South Africa
AFGRI Limited
(Incorporated in the Republic of South Africa)
Registration Number: 1995/004030/06
ISIN: ZAE000040549
JSE share code: AFR
("AFGRI" or "the Company")
THE DISPOSAL BY GROCAPITAL FINANCIAL SERVICES PROPRIETARY LIMITED ("GROCAP") OF
ITS FARMER LENDING BOOK TO THE LAND AND AGRICULTURAL DEVELOPMENT BANK OF SOUTH
AFRICA ("LAND BANK")
AFGRI Operations Limited, a wholly-owned subsidiary of the Company ("AFGRI
Operations"), and GROCAP (a wholly-owned subsidiary of AFGRI Operations) have
entered into a binding term sheet ("the Agreement") with the Land Bank in terms
of which GROCAP will, upon fulfilment of the suspensive conditions referred to
in paragraph 2 below, dispose of its existing and future farmer lending book to
the Land Bank ("the Transaction").
1 THE TRANSACTION
1.1 Rationale
1.1.1 The Transaction will improve AFGRI`s financial position and
gearing , increase its access to funding and allow AFGRI to
pursue other profitable opportunities with the capital that is
released from the sale of the farmer lending book;
1.1.2 AFGRI and GROCAP have strong and established relationships with
farmer clients that they want to retain and grow, and wish to
continue offering financial services, at the current standard of
service, to new and existing farmer clients alongside their other
products and service offerings; and
1.1.3 GROCAP has the capacity and infrastructure to act as an agent of
the Land Bank in respect of the administration functions relating
to the farmer lending book.
1.2 Terms of the Transaction
In terms of the Transaction:
1.2.1 GROCAP will sell its existing farmer lending book to the Land Bank;
1.2.2 GROCAP will continue to originate farming debt in its own name but
will, from time to time, offer to sell to the Land Bank such farming
debt as meets Land Bank`s eligibility criteria; and
1.2.3 GROCAP will administer the farmer lending book on behalf of the Land
Bank.
1.3 Purchase price
1.3.1 The purchase price of the farmer lending book shall be the face value
of the farmer lending book as at the effective date, being the agreed
date of acquisition specified in the definitive agreements referred to
in 2.1, net of audited impairments as calculated in accordance with
IAS 39. A more detailed announcement regarding the purchase price
shall be made once the definitive legal agreements referred to in 2.1
have been entered into.
1.3.2. The purchase price will be utilised by GROCAP to settle the
existing debt facilities in respect of the farmer lending book.
1.4 Pro forma financial effects of the Transaction
A more detailed announcement regarding the pro forma financial effects of
the Transaction on AFGRI shall be made once the definitive legal agreements
referred to in 2.1 have been entered into.
2 SUSPENSIVE CONDITIONS
The Transaction is subject to the fulfilment, or waiver of, inter alia, the
following conditions:
2.1 The entering into of a Sale and Purchase Agreement and a Service Level
Agreement between GROCAP, AFGRI Operations and the Land Bank ("the
Parties") and such agreements becoming unconditional according to their
terms;
2.2 the shareholders of GROCAP approving the Transaction by way of a special
resolution in terms of section 112(2)(a) read with section 115(2)(a) of the
Companies Act 71 of 2008, as amended;
2.3 the unconditional approval of the Transaction by the South African
Competition Authorities, or if such approval is conditional, subject to
conditions acceptable to the Parties;
2.4 the Land Bank confirming its approval of the results of the financial and
legal due diligence conducted by the Land Bank in respect of the farmers
lending book;
2.5 AFGRI receives opinions from qualified advisors that the transaction will
not lead to the consolidation of the sold farmer lending book in AFGRI`s
financial statements in terms of IFRS; and
2.6 the respective boards of the Parties approving the Transaction.
3 RENEWAL OF CAUTIONARY
Further to the cautionary announcements released by the Company on 4 July 2011
and 17 August 2011, as the Transaction may have a material effect on the price
of AFGRI`s shares, AFGRI shareholders are advised to continue to exercise
caution when dealing in their AFGRI shares. A further detailed announcement will
be made once the definitive transaction agreements referred to in 2.1 have been
concluded.
Centurion
14 September 2011
Attorneys for the Company and the Purchaser
Brink Cohen Le Roux
Attorneys for GROCAP
Van der Merwe Attorneys
Attorneys for the Land Bank
Edward Nathan Sonnenbergs Inc
Advisors to the Land Bank
Nedbank Capital
Sponsor of the Company
Investec Bank Limited
Date: Produced by the JSE SENS Department.
Date: 14/09/2011 08:35:28 Produced by the JSE SENS Department.
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