| Thu 7 Jun 2012, 15:36 | | CRG - Cargo Carriers - Announcement regarding the Acquisition of A 55% (Fifty |
|
CRG
CRG
CRG - Cargo Carriers - Announcement regarding the Acquisition of A 55% (Fifty
Five Per Cent) Interest in Buks Haulage Limited ("BHL") and Withdrawal of
Cautionary Announcement
CARGO CARRIERS LIMITED
(Registration Number 1959/003254/06)
Share code: CRG
ISIN: ZAE000001764
("Cargo Carriers" or "the Company")
ANNOUNCEMENT REGARDING THE ACQUISITION OF A 55% (FIFTY FIVE PER CENT) INTEREST
IN BUKS HAULAGE LIMITED ("BHL") AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1 Introduction
Further to the cautionary announcement released on SENS on 8 May 2012, the
directors of Cargo Carriers are pleased to announce the conclusion of an
agreement by the Company on 5 June 2012, in terms of which the Company will
acquire 55% (fifty five per cent) of the issued share capital of BHL ("the
Acquisition") with effect from the date of fulfilment or waiver of the
suspensive conditions set out in paragraph 5 below. The initial purchase
consideration is USD 2 200 000 (two million two hundred thousand US
dollars) to be settled by an upfront payment of USD 1 496 000 (one million
four hundred and ninety six thousand US dollars) and two annual payments of
USD 352 000 (three hundred and fifty two thousand US dollars) based on
warranted profits after tax for the next three financial years of USD 1 000
000 (one million US dollars) per year. The final purchase consideration
will be determined based on a prescribed formula calculated on BHL`s
profits after tax over the next three years and may be adjusted up or down,
provided that the total amount payable shall not exceed USD 4 400 000 (four
million four hundred thousand US dollars). Any adjustment to the final
purchase consideration, whether through additional payments by or refunds
to the Company, will be settled over a five year period. The vendor is not
a related party to Cargo Carriers.
2. Nature of Business of BHL
BHL is a Zambian registered company specialising in the transport of
various commodities including, inter alia, copper concentrates, lime and
sulphuric acid. The company provides total logistics solutions within
Zambia and sub-Saharan Africa to clients operating within the mining,
manufacturing and agricultural sectors, with the majority of its business
being in Zambia, DRC and Namibia.
3. Rationale for the Acquisition
Cargo Carriers` stated growth objective has included growth by acquisition
and risk diversification through business in neighbouring countries. The
acquisition of a controlling interest in BHL achieves both of these. This
transaction expands Cargo Carriers` ability to provide logistics solutions
in the sub-continent and to take advantage of the burgeoning mining economy
in Zambia. There are significant growth prospects in both the mining and
industrial sectors and by acquiring a well-established business with long
term contracts and proven management, the growth of Cargo Carriers on a low
risk basis is enabled.
4. Suspensive Conditions
The Acquisition is subject to the following regulatory approvals and
suspensive conditions:
- to the extent required, the approval of the Financial
Surveillance/Exchange Control Department of the South African Reserve
Bank, either unconditionally or subject to such conditions which each
party affected thereby confirms to the other in writing is/are
acceptable;
- to the extent required, the approval of the relevant Zambian authority
under the Competition and Consumer Protection Act, either
unconditionally or subject to such conditions which each party
affected thereby confirms to the other in writing is/are acceptable to
it; and
- the conclusion of a shareholders agreement between Cargo Carriers and
the Vendor.
5. Financial Effects of the Acquisition
The table below sets out the unaudited pro forma financial effects of the
Acquisition on Cargo Carriers based on the published audited results for
the year ended 29 February 2012. The unaudited pro forma financial
information has been prepared in order to show the effects of the
Acquisition, assuming that the Acquisition took place on 1 March 2011 for
purposes of the statement of comprehensive income, and as at 29 February
2012 for purpose of the statement of financial position. The pro forma
financial effects, which are the responsibility of the directors, have been
prepared for illustrative purposes only and, due to their nature, may not
fairly present Cargo Carriers financial position, changes in equity, cash
flow or the results of its operations.
29 February 31 March
2012 2012
Before After %
Acquisition Acquisition change
Weighted Average 19 400 19 400 0.0%
shares in issue
Earnings per 2.5%
ordinary share 64.95 66.57
(cents)
Headline earnings 10.1%
per ordinary share 60.71 66.84
(cents)
Shares in issue at 19 400 19 400 0.0%
period end (`000)
Net asset value 0.0%
per share (cents) 17.71 17.71
Net tangible asset -0.1%
value per share 17.57 17.55
(cents)
Assumptions:
(i) The "Before" column is based on Cargo Carriers published audited
results for the year ended 29 February 2012.
(ii) In order to provide as current information as possible to Cargo
Carriers shareholders, BHL`s management accounts for the year ended 31
March 2012 were utilised for consolidation purposes. The directors of
Cargo Carriers confirm that they are satisfied with the quality of
these accounts.
(iii)The pro forma financial effects have been calculated based on a
purchase consideration of USD 2 200 000 on the assumption that BHL has
achieved the stated profit warranties of USD 1 000 000 per annum for
the three year period commencing 1 April 2012.
(iv) The exchange rate applicable at 31 March 2012 of R7.6479 was used to
translate the statement of financial position and the average rate
during the period was applied to the statement of comprehensive
income.
(v) The assets and liabilities of BHL were fair valued at 31 March 2012.
(vi) The calculation of goodwill was based on the adjusted fair value of
the assets and amounted to R463 608.
(vii)The depreciation charge was adjusted for the increased fair value of
assets and the alignment of BHL`s existing policy with that of the
Group.
(viii)The adjustments in paragraphs (i) and (v) will have a continuing
effect on the Company.
6. Categorisation of the Acquisition in Terms of the JSE Listings Requirements
and Conformity of Memorandum of Incorporation
The acquisition is classified as a category 2 transaction in terms of the
JSE Listings Requirements. The JSE does not require the approval of
shareholders for a category 2 transaction. On fulfilment of the conditions
precedent, the Company will ensure that BHL`s memorandum of incorporation
is amended to the extent required in order to ensure conformity with
Schedule 10 of the JSE Listings Requirements.
7. Further Announcement
Cargo Carriers shareholders will be advised by way of a SENS announcement
when the suspensive conditions have all been fulfilled or waived and the
Acquisition becomes unconditional.
8. Withdrawal of Cautionary Announcement
Following the release of this announcement, the cautionary announcement is
withdrawn and shareholders are no longer required to exercise caution when
dealing in the securities of the Company.
Johannesburg
7 June 2012
Sponsors
Arcay Moela Sponsors (Pty) Ltd
Date: 07/06/2012 15:36:02 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
