| Fri 16 Mar 2012, 14:00 | | SER/SRN - Seardel Investment Corporation Limited - Settlement of litigation |
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SER SRN
SER
SER/SRN - Seardel Investment Corporation Limited - Settlement of litigation
with former directors and officers
SEARDEL INVESTMENT CORPORATION LIMITED
Registration number: 1968/011249/06
(Incorporated in the Republic of South Africa)
JSE share code: SER ISIN: ZAE000029815
JSE share code: SRN ISIN: ZAE000030144
("Seardel" or "the company")
ANNOUNCEMENT - SETTLEMENT OF LITIGATION WITH FORMER DIRECTORS AND OFFICERS
Shareholders are referred to the cautionary announcement dated 17 February
2012 and are advised that the Company and various of its subsidiary companies,
including Seardel Group Trading Proprietary Limited ("SGT") (collectively,
"Seardel Group") have, subject to all necessary approvals and consents being
obtained (including such approvals and consents as may be required in terms of
section 48 of the Companies Act No. 71 of 2008 and the JSE Listings
Requirements of the JSE Limited ("the JSE Listings Requirements")), settled
the various litigation proceedings and claims against former directors and
officers of the Company and entities controlled by them (collectively, "the
Defendants") ("the Settlement"). The Settlement will result in:
1. Loan claims owing by SGT totalling R98,6 million being ceded to SGT
("the Loan Claim").
2. The following properties ("the Properties") being transferred to SGT at
their original purchase price:
- Erf 32504, Cape Town, 36 Gunner`s Circle, Epping Industria I ("the
Epping Industria property").
- Erven 62852, 63187, 62835 and 62836, Cape Town, situate at 20,
22/24, 26 and 29 Induland Crescent, Lansdowne ("the Lansdowne
property"); and
- Remaining extent of Erf 27412, Observatory, situate at corner Main
Road and Browning Road, Observatory, Cape Town ("the Observatory
Property").
The aggregate consideration attributable to the Properties amounts to
R17.6 million and is to be set-off against the claims which Seardel Group
has against the Defendants.
The transfer of the Observatory Property is subject to the final
resolution of separate litigation by and against unrelated third parties
("the Separate Litigation").
3. The Trustees for the time being of The A Searll Descendants Trust and
Grawood Investments Proprietary Limited transferring to SGT ("the Share
Transfer") the following Ordinary and N shares held in the Company at
their closing value on 9 February 2012 being 81 cents per ordinary share
and 76 cents per `N` ordinary share:
- 14,513,649 ordinary issued shares in the issued share capital of the
Company.
- 11,885,606 `N` ordinary issued shares in the issued share capital of
the Company.
(collectively, "the Shares")
The total costs of the Share Transfer amounts to R20.8 million and is to
be set-off against claims by the Seardel Group, against certain of the
Defendants.
4. SGT receiving a cash payment of R10 million ("the Cash Payment").
The aggregate consideration attributable to the Settlement is approximately
R147.0 million, which consideration will be set off against the various
claims. This takes into account the face value of the Loan Claim, the Cash
Payment, the consideration attributable to the Properties, as well as the
market value of the Shares as at 9 February 2012.
Shareholders are further advised that for accounting purposes the aggregate
settlement value, including the Observatory property which is the subject of
the Separate Litigation, is approximately R247.0 million. This takes into
account the directors estimate of the current market value of the Properties.
Unaudited Pro Forma Financial Effects
The preparation of the unaudited pro forma financial effects of the Settlement
is the responsibility of the directors of Seardel. The unaudited pro forma
financial effects of the Settlement are presented for illustrative purposes
only to provide information on how the Settlement may impact on a Seardel
shareholder and, due to the nature thereof, may not give a fair reflection of
Seardel`s actual financial position after the Settlement.
The pro forma financial effects of the Settlement are based on the Unaudited
Consolidated Group results of Seardel for the six months period ended 30
September 2011.
The pro forma financial effects of the Settlement on Seardel`s earnings per
share ("EPS"), headline earnings per share ("HEPS") and net asset value
("NAV") per share would be as follows:
EPS HEPS
As previously stated (period ended 30 0.20 0.10
September 2011) - cents
Effect on operating results - cents 1.22 1.22
Once off effect as a result of the 30.74 30.74
Settlement -cents
Pro forma effect - cents 32.16 32.06
NAV
As previously stated (30 September 2011) - cents 177
Settlement - cents
39
Pro forma effect - cents 216
Note:
The unaudited pro forma financial effects of the Settlement are
indicative only and have been based on the following assumptions:
(1) The Settlement was effected on 1 April 2011. Accordingly, the
income statement and balance sheet for the period ended 30 September
2011 are adjusted to reflect the pro forma financial effects of the
Settlement.
(2) The Settlement is accounted for as a financial asset (debtor) at
market value which is estimated to be R208.2 million. This
excludes the Observatory property, which has an estimated market
value of R38.8 million and which is the subject of the Separate
Litigation.
(3) The weighted average number of shares taken into account as at 30
September 2011 to calculate EPS, HEPS and NAV was 703,1 million and
for the purpose of calculating the pro forma EPS, HEPS and NAV is
677.3 million.
(4) The actual interest paid on the Loan Claim from 1 April 2011 - 30
September 2011 has been reversed.
(5) Interest on the Cash Payment for the period 1 April 2011 - 30
September 2011 would have had the effect of reducing borrowings, and
is accounted for at the prime interest rate.
(6) The actual rent paid by the Seardel Group in respect of the Epping
Industria and Lansdowne Properties for the period 1 April 2011 - 30
September 2011 has been reversed.
Further Regulatory Requirements
Shareholders will be advised in due course of the further regulatory
requirements and a circular will be distributed to shareholders to obtain
approval in respect of the Share Transfer, which is to be implemented by way
of a specific share buy-back.
16 March 2012
Cape Town
Investment Bank & Sponsor
Investec Bank Limited
Legal Advisors to Seardel Group
Edward Nathan Sonnenbergs Inc.
Date: 16/03/2012 14:00:01 Produced by the JSE SENS Department.
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