| Mon 16 Apr 2012, 9:53 | | AFR - AFGRI Limited - Announcement relating to the |
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AFR
AFR
AFR - AFGRI Limited - Announcement relating to the disposal by GroCapital
Financial Services Proprietary Limited and cautionary announcement
AFGRI Limited
(Incorporated in the Republic of South Africa)
Registration Number: 1995/004030/06
ISIN: ZAE000040549
JSE share code: AFR
("AFGRI" or "the Company")
THE DISPOSAL BY GROCAPITAL FINANCIAL SERVICES PROPRIETARY LIMITED ("GROCAP")
OF ITS CORPORATE DEBTOR BOOK TO THE LAND AND AGRICULTURAL DEVELOPMENT BANK
OF SOUTH AFRICA ("LAND BANK") AND CAUTIONARY ANNOUNCEMENT
Shareholders are advised that following the announcement released on SENS on
24 October 2011, AFGRI Operations Limited, a wholly-owned subsidiary of the
Company ("AFGRI Operations"), and GROCAP (a wholly-owned subsidiary of AFGRI
Operations) have entered into a binding Term Sheet ("the Agreement") with
the Land Bank in terms of which GROCAP will, upon fulfilment of the
suspensive conditions referred to in paragraph 2 below, dispose of its
existing and future corporate debtor book to the Land Bank ("the
Transaction").
1. THE TRANSACTION
1.1 Rationale
1.1.1 The Transaction will improve AFGRI`s balance sheet and gearing
levels, increase its access to funding and allow AFGRI to pursue
more profitable opportunities with the capital that is released
from the sale of the corporate debtor book;
1.1.2 AFGRI and GROCAP have strong and established relationships with
corporate clients in the agricultural sector, which relationships
AFGRI and the GROCAP want to retain and grow, and wish to continue
offering financial services, at the current standard of service,
to new and existing corporate clients alongside their other
products and service offerings; and
1.1.3 GROCAP has the capacity and infrastructure to act as an agent of
the Land Bank in respect of the administration functions relating
to the corporate debtor book.
1.2 Terms of the Transaction
In terms of the Transaction:
1.2.1 GROCAP will sell its existing corporate debtor book to the Land
Bank;
1.2.2 GROCAP will continue to originate corporate debt in its own name
but will, from time to time, offer to sell to the Land Bank such
corporate debt as meets Land Bank`s eligibility criteria; and
1.2.3 GROCAP will manage, administer and service the corporate debtor
book on behalf of the Land Bank.
1.3 Purchase price
1.3.1 The purchase price of the farmer lending book is the face value of
the corporate debtor book as at the effective date, being the
agreed date of acquisition specified in the definitive agreements
referred to in 2.1, net of audited impairments as calculated in
accordance with IAS 39.
1.3.2 The face value of the corporate debtor book fluctuates according
to the utilisation of the corporate book facilities. The total
aggregate amount of the available corporate lending book
facilities is approximately R 1,804,800,000. As at 30 March 2012
the utilised portion of the corporate debtor book facilities was
approximately R 1,043,406,826. The corporate debtor book will be
sold in various tranches. The purchase price of the first tranche
of the corporate debtor book is approximately R 1,043,406,826.
1.3.3. The purchase price will be utilised by GROCAP to settle the
existing debt facilities in respect of the corporate debtor book.
1.4 Pro forma financial effects of the Transaction
The pro forma financial effects of the Transaction will be disclosed
once the definitive legal agreements in 2.1 have been signed
2. SUSPENSIVE CONDITIONS
The Transaction is subject to the fulfilment, or waiver of, inter alia,
the following conditions:
2.1 The entering into of a Sale Agreement and Service Level Agreement
between GROCAP, AFGRI Operations and the Land Bank ("the Parties") and
such agreements becoming unconditional according to their terms;
2.2 the shareholder of GROCAP being AFGRI Operations, approving the
Transaction by way of a special resolution in terms of section
112(2)(a) read with section 115(2)(a) of the Companies Act 71 of 2008,
as amended;
2.3 the Land Bank confirming its approval of the results of the financial
and legal due diligence conducted by the Land Bank in respect of the
farmers lending book;
2.4 the respective boards of the Parties approving the Transaction;
2.5 the Competition Authorities provides their unconditional approval for
the Transaction; and
2.6 the consent of the National Treasury, to the extent necessary, to the
Land Bank entering into the Transaction.
2.7 Shareholders are hereby advised to use caution while trading in AFGRI
securities until the Pro Forma financial effects have been disclosed.
Centurion
16 April 2012
Attorneys for the Company, AFGRI Operations and GroCap
Van der Merwe Attorneys
Sponsor of the Company: Investec Bank Limited
Date: 16/04/2012 09:42:01 Produced by the JSE SENS Department.
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