| Wed 18 Apr 2012, 17:05 | | SKY - Sea Kay Holdings Limited - Acquisition by a wholly-owned subsidiary of Sea |
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SKY
SKY
SKY - Sea Kay Holdings Limited - Acquisition by a wholly-owned subsidiary of Sea
Kay of a property development in Kwazulu-Natal, shareholders` warning and
further cautionary announcement
SEA KAY HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2006/004967/06)
JSE code: SKY
ISIN: ZAE0000
("Sea Kay" or "the Company")
ACQUISITION BY A WHOLLY-OWNED SUBSIDIARY OF SEA KAY OF A PROPERTY DEVELOPMENT IN
KWAZULU-NATAL, SHAREHOLDERS` WARNING AND FURTHER CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Shareholders are advised that on 13 April 2012, Sea Kay Engineering
Services Gauteng Province (Pty) Limited ("Sea Kay Gauteng"), a wholly-owned
subsidiary of the Company, entered into an agreement with Amber Mountain
Investments 64 (Pty) Limited ("the Seller"), in terms of which a 360 ha
commercial and residential property development ("the Property") will be
purchased ("the Transaction").
2. BACKGROUND INFORMATION
Sea Kay
Sea Kay operates in the construction and development of mass housing and
community facilities through its operational subsidiaries in Gauteng,
Western Cape and KZN. The board announced the adoption of a restructuring
plan in its results for the year ended 30 June 2011 in order to return the
Company to its core business of construction ("the Restructuring").
The Transaction
The Property has been rezoned from farmland to residential and commercial
use and has been awarded all the relevant development rights through a
Development Facilitation Act Tribunal. Subsequently the Seller installed
certain infrastructure which is now to be further developed. The Property
is well-situated close to the coast, 15 minutes north of the King Shaka
airport, and in close proximity to Ballito. The Property has been approved
to offer 975 residential opportunities as well as a number of commercial
developments. The Property comprises 19 separate title deeds, together
forming a unit of land on both sides of the N2 Highway. The Property is
well-placed to take advantage of the fast growing commercial and
residential developments in the Ballito region and is envisaged as a mid to
longer term development.
3. RATIONALE FOR THE TRANSACTION
The acquisition of the Property is on very favourable terms relative to its
commercial value. It will be necessary for Sea Kay to raise funds to
settle the purchase consideration. It is envisaged that the Transaction
will create a medium to long term pipeline of commercial work in the
private sector as well as increasing Sea Kay`s net asset value and forms
part of the Restructuring. The Transaction will result in the
diversification to commercial and private property business segments and
decrease the Company`s concentration on Public sector and Government
related work.
4. PURCHASE CONSIDERATION
The purchase price payable is R201 million and is subject to Sea Kay
obtaining the necessary financing. Sea Kay will embark on a formal fund-
raising exercise, which will comprise both debt and equity. The purchase
price must be settled through the delivery of a bank guarantee within 60
working days of the signature date of the agreement and be settled as
follows:
- R180 million on registration of the Property into Sea Kay Gauteng`s
name; and
- R21 million plus interest at prime within 12 months after
registration.
Under certain circumstances, the 60 working day period may be extended by
10 working days, however, if the purchase price is not secured within the
allowed timeframe, the agreement will lapse and be of no further force and
effect.
5. EFFECTIVE DATE
The transaction will become effective on the successful fulfilment of the
conditions precedent set out in paragraph 6 below.
6. CONDITIONS PRECEDENT
The transaction is conditional, inter alia, upon:
- the delivery of a bank guarantee for R201 million as detailed in
paragraph 4;
- the approval of the Transaction by the Company`s shareholders; and
- compliance with all regulatory obligations and the JSE Limited
Listings Requirements ("JSE Listings Requirements") to the extent
necessary to effect the Transaction.
7. FINANCIAL EFFECTS
The financial effects of the Transaction will be published in due course.
8. CLASSIFICATION OF THE TRANSACTION AND WARNING TO SHAREHOLDERS
The Transaction is classified as a reverse takeover in terms of the JSE
Listings Requirements. Shareholders are accordingly warned as to the
uncertainty of whether or not the JSE will allow the Company`s listing to
continue following the completion of the Transaction, which includes the
securing of the financing as mentioned in paragraph 4. The Company will
issue a circular to shareholders, including listing particulars as if it
was applying for a new listing on the JSE, which circular will contain,
inter alia:
- a notice of a general meeting; and
- advice as to whether or not the JSE will continue to grant a listing
to the Company if shareholders approve the Transaction and it is
subsequently concluded.
9. FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are advised that the Company is in negotiations with two other
property development owners regarding the acquisition of a retirement
village in Cape Town and a lifestyle estate in Port Shepstone.
Shareholders are therefore advised to continue to exercise caution when
dealing in the Company`s securities until such time as these negotiations
are concluded and the financial effects of the Transaction are released.
Sandton
18 April 2012
Sponsor
Vunani Corporate Finance
Date: 18/04/2012 17:05:44 Produced by the JSE SENS Department.
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