| Wed 14 Mar 2012, 11:11 | | ERB - Erbacon Investment Holdings Limited - Disposal by Erbacon of its small |
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ERB
ERB
ERB - Erbacon Investment Holdings Limited - Disposal by Erbacon of its small
plant division
Erbacon Investment Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2007/014490/06)
Share code: ERB
ISIN: ZAE000111571
("Erbacon" or "the Company")
DISPOSAL BY ERBACON OF ITS SMALL PLANT DIVISION
1. THE TRANSACTION
Shareholders are hereby advised that Erbacon entered into an agreement
on 24 February 2012 in terms of which Erbacon disposed of its 85%
shareholding in, and claims against BO`s Hire and Sales (Pty) Limited
(formerly Erbacon Small Plant (Pty) Ltd) ("the Sale Assets") ("Erbacon
Small Plant" or "ESP") to Imbewu SPV4 (Pty) Limited ("Imbewu"), on the
terms and conditions set out below ("the Disposal").
2. BUSINESS OF ERBACON SMALL PLANT
ESP is a Durban based company which hires out small plant to
construction related entities, including Erbacon, through six branches
and four satellite branches across South Africa.
3. RATIONALE FOR THE TRANSACTION
Given that the operations of ESP no longer fit with Erbacon`s strategy,
the Erbacon board of directors ("the Board") resolved in July 2011 to
discontinue its involvement in this business. This decision is in
accordance with the Group`s focus on developing further capacity within
the civils and industrial building operations which are experiencing
strong growth. The disposal has resulted in a reduction in Erbacon`s
borrowings amounting to R30 million which will permit Erbacon`s banking
facilities to be applied to the core businesses.
4. BACKGROUND INFORMATION ON THE PURCHASERS
Imbewu is controlled by Imbewu Capital Partners. Imbewu Capital
Partners is a KwaZulu-Natal black owned and controlled private equity
and investment holding company.
5. THE EFFECTIVE DATE OF THE TRANSACTION
The effective date of the transaction was the close of business 29
February 2012.
6. PURCHASE CONSIDERATION
The consideration payable by Imbewu to Erbacon for the Sale Assets in
terms of the agreement is R30 million, of which R10 million was paid on
24 February 2012("the Disposal Consideration"), plus the assumption of
debt by the purchasers amounting to R20 million. The Disposal
Consideration has been applied to reduce current overdraft facilities
of the Company.
7. CONDITIONS PRECEDENT
There are no outstanding conditions precedent in terms of the
agreement.
8. PRO FORMA FINANCIAL EFFECTS
The pro forma financial effects of the Disposal 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 Disposal.
Set out below are the unaudited pro forma financial effects of the
Disposal, based on the unaudited financial results for the six month
period ended 31 August 2011. The Board is responsible for the
preparation of the unaudited pro forma financial information.
Restated Unaudited Restated Unaudited pro Change
Financial Results Unaudited forma after
for the six month before the the Disposal
period ended 31 Disposal (Cents)
August 2011 (Cents)
Basic loss per share (43.19) (47.33) (9.59%)
Diluted loss per (30.60) (33.67) (10.04%)
share
Basic headline loss (26.74) (16.03) 40.05%
per share
Diluted headline (18.40) (10.45) 43.22%
loss per share
Net asset value per 94.63 93.88 (0.79%)
share
Net tangible asset 25.05 24.30 (2.98)
value per share
Notes and assumptions:
1. The basic and diluted loss and headline loss per share figures in
the "Unaudited pro forma after the Disposal" column have been
calculated on the basis that the Disposal was effected on 1 March
2011. The change in the basic headline loss per share of 40.05% is
due to certain of the asset impairments at 31 August 2011 not
meeting the criteria to be a headline loss adjustment, whereas the
total loss on sale of the business of ESP in the pro forma
accounts does constitute a headline loss adjustment.
2. The net asset value per share and the net tangible asset value per
share figures in the "Unaudited pro forma after the Disposal"
column have been calculated on the basis that the Disposal was
effected on 31 August 2011. The negligible change in net asset and
tangible asset value per share is due to the fact that substantial
balance sheet impairments were recognized at 31 August 2011
following the approval of the Board in July 2011 to discontinue
the ESP business.
3. The interest saving on the Disposal Consideration received has
been calculated based on the average lending rate of Erbacon for
the 6 month interim period net of tax effects. Taxation has not
been provided for on the loss on sale, due to the utilisation of
assessed losses being remote.
4. The basic earnings per share and the basic headline earnings per
share figures are calculated based on a weighted average number of
shares in issue of 193.8 million shares as at 31 August 2011.
5. The net asset value per share and net tangible asset value per
share have been calculated based on 193.8 million shares in issue
as at 31 August 2011.
14 March 2012
Durban
Designated adviser:
PSG Capital (Pty) Limited
Date: 14/03/2012 11:11:48 Produced by the JSE SENS Department.
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