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PSV - PSV Holdings Limited - Disposal of the pump 22 Feb 2012
PSV
PSV
PSV - PSV Holdings Limited - Disposal of the pump business and cautionary
announcement
PSV Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 1988/004365/06)
Share code: PSV ISIN: ZAE000078705
("PSV")
DISPOSAL OF THE PUMP BUSINESS AND CAUTIONARY ANNOUNCEMENT
1. THE DISPOSAL OF THE PUMP BUSINESS
1.1 Introduction
The board of directors of PSV ("the Board") is pleased to advise
shareholders that PSV has entered into a Sale of Shares Agreement
("Disposal Agreement") with WPIL International Pte Limited ("WPIL"), a
private company incorporated in accordance with the laws of the Republic
of Singapore and a subsidiary of WPIL Limited, a global player in large
engineered water handling pumps for the power, municipal mining and oil
and gas sectors. In terms of the Disposal Agreement, and subject to the
fulfilment or waiver of the conditions precedent set out in paragraph
1.4 below, WPIL will acquire from PSV 100% of the issued share capital
of each of APE Pumps Proprietary Limited ("APE Pumps") ("APE Shares"),
Mather + Platt (SA) Proprietary Limited ("Mather + Platt") ("Mather +
Platt Shares"), PSV Properties 2 Proprietary Limited ("PSV Properties
2") ("PSV Properties 2 Shares"), PSV Services Proprietary Limited ("PSV
Services") ("PSV Services Shares") and PSV Zambia Limited ("PSV Zambia")
("PSV Zambia Shares"), and 100% of all and any claims on loan account,
or otherwise ("Claims"), due to PSV by APE Pumps, Mather + Platt, PSV
Properties 2, PSV Services and PSV Zambia, collectively referred to
hereinafter as the "Companies" or the "Pump Business", at the effective
date of the disposal detailed in paragraph 1.4 below, for a total
consideration of R54 million ("Disposal").
The APE Shares, the Mather + Platt Shares, the PSV Properties 2 Shares,
the PSV Services Shares and the PSV Zambia Shares, which are
collectively referred to hereinafter as the "Shares", together with the
Claims, are referred to hereinafter as the "Interest".
1.2 Nature of the Pump Business and rationale for the Disposal
PSV`s Pump Business, which operates primarily in South Africa and
Zambia, has been designing, manufacturing, maintaining, refurbishing
and importing pumps for over five decades, and has an extensive product
base in mines, municipalities, paper mills, minerals beneficiation
companies, ports and harbours, water authorities, power generation
utilities and petrochemical refineries throughout Africa and worldwide.
The rationale for the disposal is to expunge PSV`s primary debt and
inject free cash flow back into the remaining subsidiaries for working
capital purposes.
1.3 Purchase Consideration
The total Purchase Consideration, payable by WPIL to PSV for the
Interest, comprising the Shares and the Claims, is R54 million, which
is payable in cash by WPIL to PSV. It is the intention of the Board to
utilise the Purchase Consideration to reduce its current levels of
debt, inject working capital into its remaining subsidiaries and pay a
special dividend to its shareholders. In essence, PSV will dispose of
approximately 20% of its business at a price which is about 20% in
excess of its current market capitalisation.
1.4 Effective date and conditions precedent
The effective date of the Disposal is the first day of the month
following the date on which the last of the conditions precedent is
fulfilled or waived, as the case may be.
The Disposal is subject to the fulfilment or waiver of the following
conditions precedent:
- on approximately 24 February 2012, the Boards of PSV and WPIL passing
a resolution to approve the Disposal;
- on approximately 19 March 2012, PSV providing WPIL with written
confirmation that Investec Bank Limited unconditionally agrees to release
all securities currently held over the Shares and/or assets of the
Companies upon receipt of the Purchase Consideration;
- on approximately 19 March 2012, WPIL delivering to PSV confirmation
from its bankers that WPIL will have sufficient funds in its bank account
at the Closing Date, being the seventh business day after the effective
date, to settle the Purchase Consideration;
- on approximately 20 March 2012, PSV delivering to WPIL a signed copy
of the Companies` management accounts for the period ended 28 February
2012;
- on approximately 30 March 2012, shareholders of PSV in a general
meeting passing the resolutions necessary to give effect to the Disposal
in accordance with the provisions of the Listings Requirements of JSE
Limited ("JSE");
- on approximately 30 March 2012, the Boards of PSV and WPIL, to the
extent required, obtaining all approvals from the relevant regulatory
authorities in South Africa and India, including if applicable, the
Competition Commission; and
- on approximately 30 March 2012, the PSV group having undergone an
internal restructure in order to transfer all of the assets owned by PSV
but which, as at the date of signature of the Disposal Agreement, are
being utilised by any of the Companies to conduct their business.
1.5 Other
PSV at any time prior to the effective date, shall be entitled, but not
obliged to declare, as a dividend, all consolidated audited after tax
profits generated by the Companies between 1 March 2011 and the
effective date, which shall be paid either in cash, by offsetting any
amounts due and payable to any of the Companies, or in specie.
The Disposal of the Pump Business, which is subject to warranties that
are normal in this type of transaction, is also subject to a net asset
value warranty in terms of which PSV warrants to WPIL that the
consolidated audited net asset value of the Companies at the effective
date will be no less than the consolidated audited net asset value of
the Companies as at 28 February 2011. In calculating such consolidated
audited net asset value of the Companies, PSV shall be entitled to
reduce PSV Zambia`s inventory value as at 28 February 2011 by not more
than R2.2 million.
WPIL shall be entitled to use the names `PSV Services` and `PSV Zambia`
for a period of no more than 12 months thereafter, WPIL shall procure
that the aforementioned names shall be changed as not to incorporate
the name `PSV` or any such similar name or trademark.
1.6 PRO FORMA FINANCIAL EFFECTS
The pro forma financial effects of the Disposal of the Pump Business on
the reported financial information of PSV will be announced to
shareholders in due course.
1.7 CATEGORISATION OF THE DISPOSAL AND FURTHER DOCUMENTATION
The Disposal of the Pump Business constitutes a Category 1 Disposal in
terms of section 9.5(b) of the Listings Requirements of the JSE.
Accordingly, a circular containing full details of the Disposal of the
Pump Business, including, inter alia, a notice to convene a general
meeting of PSV shareholders in order to consider and, if deemed fit to
pass, with or without modification, the resolutions necessary to approve
and implement, inter alia, the Disposal of the Pump Business, will be
distributed to PSV shareholders in due course.
2. CAUTIONARY ANNOUNCEMENT
Further to paragraph 1.6 above, shareholders are advised to exercise
caution when dealing in PSV`s securities until a further announcement,
incorporating the pro forma financial effects of the Disposal of the
Pump Business, is made.
Johannesburg
22 February 2012
Designated Adviser
Merchantec Capital
Legal Adviser to PSV
Mahons Attorneys
Date: 22/02/2012 13:06:18 Produced by the JSE SENS Department.
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