| Thu 1 Mar 2001, 0:00 | | Acquisition By Wbho Of A 40% Interest In Probuild |
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WILSON BAYLY HOLMES - OVCON LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1982/011014/06)
("WBHO" or "the company")
Acquisition by WBHO of a 40% interest in Probuild Constructions (Aust) (Pty)
Ltd
and Probuild Constructions (Residential) (Pty) Ltd
1. INTRODUCTION
Further to the cautionary announcement published in the press on 30 January
2001, Investec Bank Limited is authorised to announce that agreement has been
reached in terms of which WBHO Australia (Pty) Ltd ("WBHO Australia"), a
wholly-owned subsidiary of WBHO, acquired 40% of the issued share capital of
Probuild Constructions (Aust) (Pty) Ltd ("Probuild Construction") and Probuild
Constructions (Residential) (Pty) Ltd ("Probuild Residential") (collectively
referred to as "Probuild"), with effect from 22 February 2001 ("the
transaction"), from W B Judson, P M Mehrten and E R Yencken (collectively
referred to as "the vendors").
2. NATURE OF THE BUSINESS OF PROBUILD
Probuild has established itself as a leading mid-range building contractor in
Melbourne, Australia. It undertakes all forms of construction projects under a
wide variety of delivery processes, with the main focus being on building
construction works.
3. RATIONALE FOR THE TRANSACTION
The transaction will enable WBHO to gain a business platform in the Australian
construction industry from which further expansion initiatives can be launched.
In the process, WBHO will diversify the geographic base of its activities and
the currency base of its earnings.
Probuild will gain access to an improved capital base, which will facilitate
the expansion of its operations nationally in Australia. In addition, the
existing skills base within WBHO will enable Probuild to diversify into civil
engineering activities.
4. TERMS OF THE TRANSACTION
WBHO Australia acquired 12 297 927 ordinary shares in Probuild Construction,
which represents 40% of its issued ordinary share capital, and 213 457 ordinary
shares in Probuild Residential, which represents 40% of its issued ordinary
share capital, from the vendors, with effect from 22 February 2001.
4.1 Purchase consideration
The purchase consideration for the transaction, to be settled in cash, amounts
to a maximum of A$12 394 495 ("the purchase consideration"). If the combined
profit before tax of Probuild for the financial year ended 30 June 2001 ("the
combined net profit") is below A$8 500 000, the purchase consideration will be
reduced by a predetermined multiple of the difference between A$8 500 000 and
the combined net profit ("the shortfall amount").
The purchase consideration is payable as follows:
- A$12 000 000 on 22 February 2001; and
- A$394 495 less the shortfall amount, if any, together with interest thereon
accruing from 22 February 2001.
4.2 Option agreement
WBHO Australia has call options to acquire a further 30% of the issued ordinary
shares in both Probuild Construction and Probuild Residential from the vendors,
based on a multiple of the average profit after tax for the three financial
years prior to the exercise of the options, as follows:
- 9% from 30 November 2002 to 7 December 2002;
- 2% from 30 November 2004 to 7 December 2004;
- 9% from 30 November 2006 to 7 December 2006; and
- 10% from 30 November 2008 to 7 December 2008.
The vendors, in turn, have mirroring put options against WBHO Australia.
4.3 Warranties
Warranties and indemnities normal in a transaction of this nature have been
provided.
5. FINANCIAL EFFECTS
The table below sets out the pro forma financial effects of the transaction on
a WBHO shareholder, based on the following:
- the amounts in the "before" column are based on the audited financial
statements of WBHO for the financial year ended 30 June 2000;
- the headline earnings in the "after" column have been adjusted to include
the results of Probuild Construction and Probuild Residential for the financial
year ended 30 June 2000;
- the headline earnings in the "after" column are based on the assumption that
the transaction was implemented on 1 July 1999 and that the investment in
Probuild is equity accounted;
- the headline earnings of WBHO for the financial year ended 30 June 2000 have
been reduced by applying an after-tax interest rate of 6% to the purchase
consideration; and
- the net asset value amounts in the "after" column are based on the
assumption that the transaction was implemented on 30 June 2000.
Year ended 30 June 2000
Actual Pro forma %
before After Increase/
Per WBHO share (cents) (cents) (decrease)
Headline earnings 88,0 98,7 12,1
Net asset value 373,9 373,9 -
Tangible net asset value 373,9 283,8 (24,1)
6. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
WBHO shareholders are advised that due to the transaction the cautionary
announcement dated 30 January 2001 is hereby withdrawn and shareholders no
longer need exercise caution in dealing in their shares.
Johannesburg
1 March 2001
Merchant bank to WBHO
Investec Corporate Finance
Investec Bank Limited
(Registration number 1969/004763/06)
Sponsor to WBHO
Investec Bank Limited
(Registration number 1969/004763/06)
Corporate advisers to WBHO in Australia
PricewaterhouseCoopers Securities Limited
ACN 003311617
(Incorporated in Australia)
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