| Thu 2 Feb 2012, 13:56 | | BDM - Buildmax Limited - Disposal of wholly-owned subsidiary and cautionary |
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BDM
BDM
BDM - Buildmax Limited - Disposal of wholly-owned subsidiary and cautionary
announcement
BUILDMAX LIMITED
Incorporated in the Republic of South Africa
(Registration No. 1995/012209/06)
Share Code: BDM
ISIN Code: ZAE000011250
("Buildmax" or "the Group")
DISPOSAL OF WHOLLY-OWNED SUBSIDIARY AND CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Buildmax is pleased to announce that it has reached an agreement, dated 31
January 2012, with JP Otto and LJ Wightman ("the Purchasers"), in terms of which
the Purchasers will acquire all the shares in and claims against Columbia DBL
(Proprietary) Limited, a wholly-owned subsidiary of Buildmax ("Columbia") ("the
Proposed Disposal") from Buildmax.
2. THE PROPOSED DISPOSAL
2.1 Rationale for the Proposed Disposal
In line with the board of directors` ("the Board") strategy of consolidation,
strategic positioning and restructuring of the Group`s activities to improve the
overall financial position of Buildmax in order to maintain competitiveness and
deliver adequate returns to Buildmax`s shareholders, the Board has decided to
dispose of Columbia. Columbia is a masonry product manufacturer based in the
Western Cape which has been unable to deliver sustainable positive returns. The
disposal of this loss-making subsidiary will achieve strategic alignment and
improve profitability and cash flow of the Group, while supporting the strategic
repositioning of Buildmax to focus on transforming the Group into an opencast
mining supply chain services and bulk civils earth works company.
2.2 PURCHASE CONSIDERATION FOR THE PROPOSED DISPOSAL
Buildmax has disposed of its shares in and claims against Columbia for a total
purchase consideration of R1, which will be paid by the last day of the month in
which all the suspensive conditions have been fulfilled or waived, as detailed
in paragraph 2.3 below.
Columbia has an outstanding shareholder loan account from Buildmax amounting to
R22 million ("the Loan Account"). The Purchasers have agreed to purchase the
Buildmax Loan for R5.5 million ("Purchase Consideration"). R1 million was paid
on signature date, with the balance, being an amount of R4.5 million, payable in
no more than 36 equal monthly installments commencing on 1 March 2012. The
purchasers are entitled to, on or before 30 April 2012, pay a total amount of R3
million as full and final settlement of the Loan Account, with the remaining
balance of the Loan Account being treated as an early settlement discount.
2.3 SUSPENSIVE CONDITIONS
The Proposed Disposal is subject to, inter alia, the fulfillment or waiver of
the suspensive condition that all required regulatory approvals have been
obtained in relation to the implementation of the Proposed Disposal.
2.4 EFFECTIVE DATE
The effective date of the Proposed Disposal is, subject to the fulfillment of
the suspensive conditions, 1 December 2011.
2.5 PROCEEDS OF THE PURCHASE CONSIDERATION
The Purchase Consideration will be utilised to settle debt.
3. FAIRNESS OPINION
In terms of paragraph 10.7 of the JSE Limited (the JSE") Listings Requirements,
the Proposed Disposal is categorised as a small related party transaction as a
result of the Purchasers being directors of Columbia. Accordingly, an
independent professional expert acceptable to the JSE has been appointed to
confirm that the terms of the Proposed Disposal are fair as far as the Buildmax
shareholders are concerned ("the Fairness Opinion").
4. PRO FORMA FINANCIAL EFFECTS
The table below sets out the unaudited pro forma financial effects of the
Proposed Disposal based on the assumption that the Proposed Disposal took place
with effect from 1 March 2011 for basic and headline earnings per share purposes
and on 31 August 2011 for net asset value per share and tangible net asset value
per share purposes.
The unaudited pro forma financial effects are presented for illustrative
purposes only and, because of their nature, may not fairly present Buildmax`s
financial position or the results of its operations after the Proposed Disposal
has been implemented. The unaudited pro forma financial effects are the
responsibility of the Board.
Before After the Percentage
the disposal change
disposal (ii)
(i)
Basic and diluted loss per -0.30 -0.50 -66.67%
share (cents) (iii)
Headline and diluted headline 0.20
earnings per share (cents) 0.00 17,918%
(iii)
Net asset value per share 16.00 16.00 0.00%
(cents) (iv)
Net tangible asset value per 13.80 13.80 0.00%
share (cents) (iv)
Number of shares and weighted
average number of shares in 3,444,71 3,444,716 -
issue (000`s) 6
Notes
i) The financial information as set out in the "Before the disposal" column
has been extracted without adjustment from the unaudited published interim
results of Buildmax for the period ended 31 August 2011.
ii) The financial information as set out in the "After the disposal" column has
been based on the financial information as set out in the previous column
having been adjusted for the effects of the Proposed Disposal.
iii) The basic and diluted (loss) / earnings per share and the headline and
diluted headline loss per share as set out in the "After the disposal"
column are based on the unaudited interim statement of comprehensive income
for the six months ended 31 August 2011 for Buildmax and Columbia and the
assumptions that:
a) the Proposed Disposal took place on 1 March 2011 for a purchase
consideration of R1;
b) the loss on sale of Columbia amounting to R13.2 million
c) transaction costs incurred pertaining to legal fees are immaterial;
and
d) the reversal of the trading results of Columbia referred to above will
have a continuing positive effect on Buildmax.
iv) the pro forma net asset and net tangible asset value per share has been
adjusted to include the following:
a) deconsolidation of Columbia from the Group; and
b) the loss on sale of Columbia amounting to R13.2 million.
5. CAUTIONARY
The Fairness Opinion pertaining to the Proposed Disposal has not yet been
finalised. Buildmax shareholders are therefore advised to exercising caution
when dealing in the Group`s securities until the Fairness Opinion is announced
in due course.
2 February 2012
Corporate Advisor and Transaction Sponsor
QuestCo (Pty) Limited
Sponsor
Java Capital
Date: 02/02/2012 13:56:01 Produced by the JSE SENS Department.
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