| Tue 22 Nov 2011, 7:08 | | COH - Curro Holdings Limited - Acquisition by Curro of the entire issued |
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COH
COH
COH - Curro Holdings Limited - Acquisition by Curro of the entire issued
share capital of Woodhill College and Woodhill Property
Curro Holdings Limited
Incorporated in the Republic of South Africa
Registration number: 1998/025801/06thj
Share code: COH
ISIN: ZAE000156253
("Curro" or "the Company")
ACQUISITION BY CURRO OF THE ENTIRE ISSUED SHARE CAPITAL OF WOODHILL COLLEGE
AND WOODHILL PROPERTY
1. THE ACQUISITION
Shareholders are hereby advised that Curro has entered into an
agreement with the Trustees for the time being of the Rudell Holdings
Trust, IT 867/94 ("the Seller"), in terms whereof the Seller will
dispose of the entire issued share capital ("the Sale Shares") in
Woodhill College Proprietary Limited ("Woodhill College") and Woodhill
College Property Holdings Proprietary Limited ("Woodhill Property"),
to Curro ("the Acquisition").
2. BUSINESS OF WOODHILL COLLEGE AND WOODHILL PROPERTY
2.1 Woodhill College conducts the business of a co-educational,
independent, non-denominational Christian School for learners from
Grade 000 (nursery school) to Grade 12 ("the School").
2.2 Woodhill Property is a property holding company owning the immovable
property on which Woodhill College conducts the School.
3. DETAILS OF THE SELLER
The Seller is the Rudell Holdings Trust, IT 867/94, being a
discretionary inter-vivos Trust which is unrelated to the Company.
4. THE RATIONALE FOR THE ACQUISITION
During the past 15 years, several private schools in South Africa were
developed and established by sole owners. Many such schools have
developed into high quality, large private schools. At a certain stage
of any school`s developmental phase, the owner(s) must make a decision
to either expand the school further, requiring more capital
investment, or incorporate their school into a larger, more focussed
educational group with adequate expansion capital, to ensure
sustainability and the availability of expansion capital to further
expand the school should demand indicate such a need.
Woodhill College is a well managed, high quality private school asset.
The college is profitable with good, sustainable cash flows. By
incorporating Woodhill College into the Curro Holdings Group, Curro
can further improve the school`s profitability and positive cash flows
by introducing and implementing various synergy benefits within the
Curro Group to Woodhill College.
Furthermore, the Woodhill model would complement Curro`s existing
range of high quality schools across South Africa. The School`s rich
history of academic and sport achievements, combined with their high
quality staff and management, would add to Curro`s existing schools.
The acquisition of Woodhill College will also offer Curro the
possibility of expanding the Woodhill brand and model to other areas
in South Africa, where the development of this model can complement
the existing Curro model.
5. THE EFFECTIVE DATE OF THE ACQUISITION
The effective date of the Acquisition ("the Effective Date") is first
day of the calendar month in which the last of the outstanding
conditions precedent, as more fully set out in paragraph 7 below ("the
Conditions Precedent") are fulfilled.
6. PURCHASE CONSIDERATION
6.1. The consideration payable by Curro to the Seller for the Acquisition
is the sum of R185 000 000 ("the Purchase Consideration") of which:
6.1.1. R99 800 000 is attributable to the Woodhill Property portion
of the Sale Shares; and
6.1.2 R85 200 000 is attributable to the Woodhill College portion
of the Sale Shares.
6.2. The Purchase Consideration is subject to a downward adjustment on
completion and acceptance of a due diligence investigation and will be
adjusted on the following basis:
6.2.1. all creditors, debt and liabilities of Woodhill Property and
Woodhill College as at 31 December 2011, other than debt arising
from debentures issued and inter-company loans, will be deducted
from the Purchase Consideration;
6.2.2. all debtors of Woodhill Property and Woodhill College as at
31 December 2011, as adjusted for doubtful debt, will be added to
the Purchase Consideration.
6.3. If the calculations in paragraphs 6.2.1 and 6.2.2 above yield a result
of less than R185 000 000, the Purchase Consideration shall be reduced
in an equivalent amount, provided that the final Purchase
Consideration as adjusted in terms of 6.2 shall not be less than R170
000 000.
6.4. If the calculations in 6.2.1 and 6.2.2 yield a result of more than
R185 000 000, there will be no upward adjustment of the Purchase
Consideration.
6.5 The finally determined Purchase Consideration shall attract interest
at the prime rate per annum, as published by ABSA Bank Limited from
time to time, calculated daily and compounded monthly, for the period
from the Effective Date to the date of payment of the Purchase
Consideration, which date of payment shall be within a maximum of 14
business days after fulfilment of the last of the outstanding
Conditions Precedent.
7. CONDITIONS PRECEDENT
7.1 The Acquisition is subject to the following Conditions Precedent:
7.1.1 the Seller, to the extent applicable, obtaining consent from
any third party, including third party financiers as may be
required for the Acquisition by no later than 31 January 2012;
7.1.2 unconditional approval by the Competition Authorities of the
Acquisition or approval on a conditional basis on conditions that
are acceptable to Curro by no later than 28 February 2012; and
7.1.3 the completion and acceptance by Curro of a due diligence
investigation, which is to be completed within 9 business days of
fulfilment of all other conditions precedent set out above, and
board approval of the Acquisition within 2 business days of the
completion of the due diligence investigation.
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 unaudited interim results for the period
ended 30 June 2011. The directors of Curro are responsible for the
preparation of the unaudited pro forma financial information.
Unaudited before Unaudited Pro Change (%)
acquisition Forma after
(cents) acquisition
(cents)
Basic earnings per (9.6) (8.3) 12.9%
share
Basic headline (9.6) (8.3) 12.9%
earnings per share
Net asset value per 61.8 61.8 0.0%
share
Net tangible asset 28.4 13.5 (52.4%)
value per share
Notes and assumptions:
1. 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 January 2011.
2. 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.
3. The taxation rate applicable is assumed to be 28%.
4. The basic earnings per share and basic headline earnings per
share figures are calculated based on weighted average number of
shares in issue of 161 214 080 at 30 June 2011.
5. The net asset value per share and net tangible asset value per
share have been calculated based on 161 214 080 shares in issue
at 30 June 2011.
6. The pro forma effects for the Acquisition is based on a total
Purchase Consideration of R185 000 000 which is further assumed
to be debt financed based on an interest rate of 9% per annum.
7. R12 000 000 of the Purchase Consideration is deemed to be
allocated to intangible assets acquired as part of the
Acquisition.
8. Transaction costs of R250 000 are assumed.
9. CLASSIFICATION OF THE TRANSACTION AND RELATED MATTERS
9.1 The Acquisition is classified as a Category 2 transaction in terms of
the Listings Requirements of the JSE Limited.
9.2 If the Acquisition becomes unconditional as to its terms and is
implemented, Woodhill Property and Woodhill College will become wholly
owned subsidiaries of Curro. Curro accordingly confirms that the
memoranda of incorporation of both Woodhill Property and Woodhill
College will be amended to conform with the Listings Requirements of
the JSE Limited as soon as reasonably possible following the
implementation of the Acquisition.
10. WARRANTIES AND INDEMNITIES
The Seller has provided the Company with warranties and indemnities
that are usual for a transaction of this nature.
11. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcement dated 19
October 2011 and are advised that caution is no longer required to be
exercised by shareholders when dealing in their securities and
accordingly the cautionary announcement is hereby withdrawn.
Durbanville
22 November 2011
Designated Adviser
QuestCo Sponsors (Pty) Limited
Corporate Adviser
PSG Capital (Pty) Limited
Date: 22/11/2011 07:08:14 Produced by the JSE SENS Department.
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