| Fri 16 Sep 2011, 13:43 | | UBU - Ububele - Acquisition by Yield Chemicals Group (PTY) Limited of 49.9% of |
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UBU
UBU
UBU - Ububele - Acquisition by Yield Chemicals Group (PTY) Limited of 49.9% of
the issued share capital of Erintrade (PTY) Limited and R.T. Chemicals (PTY)
Limited
Ububele Holdings Limited
Incorporated in the Republic of South Africa
(Registration number: 1998/011074/06)
Share code: UBU
ISIN Code: ZAE000144739
("Ububele" or "the Company")
ACQUISITION BY YIELD CHEMICALS GROUP (PTY) LIMITED OF 49.9% OF THE ISSUED SHARE
CAPITAL OF ERINTRADE (PTY) LIMITED ("ERINTRADE") AND R.T. CHEMICALS (PTY)
LIMITED ("R.T. Chemicals")
1. THE ACQUISITION
1.1 Shareholders are hereby advised that Yield Chemicals Group (Pty)
Limited ("the Purchaser" or "Yield Chemicals Group"), a subsidiary of
the Company, has entered into a sale of shares agreement with Messrs
Richard Peter Wimbush, Richard Trevor Wimbush and JJ Faul
(collectively hereinafter "the Sellers"), in terms of which the
Sellers will dispose of 49.9% of the entire issued share capital in
Erintrade (Pty) Limited and R.T. Chemicals (Pty) Limited ("the Sale
Shares"), to the Purchaser ("the Acquisition").
1.2 The Company currently has an existing interest of 50.1% in Erintrade
and R.T Chemicals and the Sellers are all directors of Erintrade and
R.T Chemicals.
1.3 As mentioned in paragraph 1.1 above, the Sellers collectively consist
of the following individuals, who hold the following proportionate
interests in the issued share capital of Erintrade and R.T Chemicals:
1.3.1 Richard Peter Wimbush - 16.9%;
1.3.2 Richard Trevor Wimbush - 26.3%; and
1.3.3 JJ Faul - 6.7%.
2. BUSINESS CARRIED ON BY ERINTRADE AND R.T CHEMICALS
Erintrade and R.T Chemicals were formed respectively in 2006 and 1987 and
have morphed from start-up businesses supplying detergents, adhesives, fire
fighting foams and speciality paints into specialist businesses now
concentrating solely on the manufacturing and distribution of a core range
of crop enhancement products. Currently the companies own 63 registrations,
with another 51 registrations on various cultivars, in different stages of
registration. Erintrade and R.T Chemicals currently distribute products in
South Africa, Namibia, Botswana, Zimbabwe, Mozambique, Tanzania and Malawi.
3. EFFECTIVE DATE OF THE ACQUISITION
In terms of the sale of shares agreement the effective date of the
Acquisition is 1 July 2011.
4. RATIONALE OF THE ACQUISITION
The Yield Chemicals Group is currently involved in the distribution of crop
enhancement products in South Africa and other African countries. Yield
Chemicals Group already owns 50.1% of Erintrade and RT Chemicals, and
Enviro Industries, and the purchase of the remainder of the equity in
Erintrade and RT Chemicals will give the Yield Chemicals Group full control
over its own manufacturing operations and will enhance the Yield Chemicals
Group.
5. PURCHASE CONSIDERATION
5.1. The total consideration payable by the Purchaser to the Sellers for
the purchase of the Sale Shares is the sum of R40 000 000 and shall be
payable in cash to the Sellers in the following proportions:
5.1.1 Richard Peter Wimbush - R13 547 094.19;
5.1.2 Richard Trevor Wimbush - R21 082 164.33; and
5.1.3 JJ Faul - R5 370 741.48.
5.2 The purchase consideration will be settled by the Purchaser by no
later than 1 October 2011. The parties have also agreed that the
Sellers may grant the Purchaser a maximum of 60 days grace to settle
the purchase consideration.
5.3 The Purchaser shall pay interest monthly in arrears on the purchase
consideration, or any portion thereof outstanding after the effective
date at a rate of prime plus 2% until the full purchase consideration
and interest are paid in full.
6. CONDITIONS PRECEDENT
The Acquisition is subject to the following condition precedent that has
not been fulfilled:
6.1 By no later than 30 September 2011 the Purchaser shall furnish the
Sellers with a bank guarantee for the payment of an amount of not less
than R40 million from a recognised major bank, on terms and conditions
and in a form reasonable to the Sellers.
7. WARRANTIES
Warranties as are normal in transactions of this nature have been provided
by each of the Sellers, to the Purchaser.
8. PRO FORMA FINANCIAL EFFECTS
The pro forma financial effects of the Acquisition are presented for
illustrative purposes only and because of their nature may not give a fair
reflection of the Company`s financial position nor of the effect on future
earnings after the Acquisition.
Set out below are the unaudited pro forma financial effects of the
Acquisition, based on the reviewed abridged results for the year ended 30
June 2011. The directors of Ububele are responsible for the preparation of
the unaudited pro forma financial information.
Reviewed Pro Unaudited Pro Change (%)
Forma before Forma after
acquisition acquisition
(cents) (cents)
Basic earnings per 1.25 1.71 36.45
share
Basic headline 1.27 1.73 35.91
earnings per share
Net asset value per 73.81 73.47 (0.46)
share
Net tangible asset 7.13 (4.23) (159.37)
value per share
Notes and assumptions:
1 The "Reviewed Pro Forma before acquisition" figures have been
extracted from the Reviewed Provisional financial statements of
Ububele for the year ended 30 June 2011.
2 The basic earnings per share and basic headline earnings per share
figures in the "Pro Forma after acquisition" column have been
calculated on the basis that the Acquisition was effected on 1 July
2010.
3 The net asset value per share and net tangible asset value per share
figures in the "Pro forma after acquisition" column have been
calculated on the basis that the Acquisition was effected on 30 June
2011.
4 The taxation rate applicable is assumed to be 28%.
5 The basic earnings per share and basic headline earnings per share
figures are calculated based on weighted average number of shares in
issue of 177 161 405 at 30 June 2011.
6 The net asset value per share and net tangible asset value per share
have been calculated based on 177 167 822 shares in issue at 30 June
2011.
7 Interest paid is based on the prime lending interest rate.
8 Transaction costs of R600 000 have been assumed.
9. RELATED PARTY AND CATEGORISATION OF THE TRANSACTION
The Acquisition is classified as a Category 1 transaction in terms of the
Listings Requirements of the JSE Limited requiring shareholder approval.
Ububele shareholders are further advised that due to the fact that the
Sellers are directors of R.T Chemicals, which is a subsidiary of the
Company, the Acquisition is also deemed to be a related party transaction
in terms of the Listings Requirements of the JSE Limited and therefore the
board will appoint an independent expert to prepare a fairness opinion on
the Acquisition.
10. DOCUMENTATION
Accordingly, a circular detailing the terms of the Acquisition, containing
the fairness opinion and convening a general meeting will be posted to
Ububele shareholders in due course.
16 September 2011
Designated Adviser
PSG Capital (Pty) Limited
Date: 16/09/2011 13:43:51 Produced by the JSE SENS Department.
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