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Northern Engineering Industries Africa Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1978/001240/06)
DETAILED CAUTIONARY ANNOUNCEMENT
Introduction
Further to the cautionary announcement dated 27 March 2001, the board of
directors of NEI wishes to announce that NEI and its subsidiaries have entered
into a sale agreement with Alstom South Africa (Proprietary) Limited ("Alstom")
("the agreement"). Alstom does not currently have a shareholding in NEI.
The agreement and the effect thereof
Alstom has agreed, subject to the fulfilment of certain suspensive conditions,
to acquire the businesses of the operating divisions of NEI Africa Operations
Limited, a wholly owned subsidiary of NEI ("the seller") together with the land
and buildings of the various property owning companies in the seller's group as
going concerns and certain assets of the Head Office division of the seller.
Only expressly agreed upon liabilities are to be assumed by Alstom.
If the agreement is approved by the holders of NEI ordinary shares and if the
remaining suspensive conditions are fulfilled, all the businesses of NEI and
its subsidiaries will be sold to Alstom.
The resulting cash proceeds from the sale will, subject to the passing of the
necessary special resolution, be distributed to NEI shareholders pursuant to a
members' voluntary winding up of NEI. The listing of NEI on the JSE Securities
Exchange South Africa ("JSE") will then be suspended and terminated.
Suspensive conditions
The agreement is subject to, inter alia, the following suspensive conditions:
* The completion by Alstom of a due diligence investigation in relation to the
financial position, affairs and operations of NEI and its divisions and an
environmental investigation at each industrial site of NEI ("the
investigations");
* The approval of the Competition Commission of the change in control to be
brought about on the implementation of the transaction contemplated in the
agreement;
* The approval of the relevant documentation by the Securities Regulation Panel
("SRP"), the JSE and the South African Reserve Bank; and
* The approval by ordinary resolution of the shareholders of NEI.
Consideration
The purchase price payable in terms of the agreement will be the audited values
of the assets to be acquired at 31 March 2001 less the specific liabilities to
be assumed, subject to certain agreed adjustments. The purchase price will
bear interest from the effective date, being 1 April 2001, until the date of
payment.
The indicative value after the members' voluntary winding up of NEI is
estimated to be between R10.50 and R11.50 per NEI share.
The purchase price payable in terms of the agreement, will only be confirmed
after the completion of the investigations and completion of an audit of the
net asset value as at 31 March 2001 which are expected to be finalised on or
before 18 May 2001.
Alstom's right to cancel the agreement or a reduction in the purchase price
Alstom will be entitled to cancel the agreement on written notice to be given
by 21 May 2001, if certain forecast net asset values and/or performance targets
of NEI and its divisions as at 31 March 2001 are not met by certain specified
amounts or percentages, or if certain liabilities are established which exceed
certain threshold amounts. If differences identified are lower than the
aforementioned threshold amounts, then Alstom will be entitled to a reduction
in the purchase price on a Rand for Rand basis. Any differences would be
identified through the investigations and the audit of the net assets of NEI at
31 March 2001.
Further announcement and further exercising of caution
Upon completion of the investigations and the audit, a further announcement
setting out the final terms of the agreement and the final purchase price will
be made, which is expected to be on or about 22 May 2001. Accordingly,
shareholders are advised to continue exercising caution when dealing in the
company's securities until such announcement is made.
Johannesburg
5 April 2001
Corporate Advisers and Sponsor
KPMG
Legal advisers to NEI
Deneys Reitz
Attorneys
Legal Advisers to Alstom
Brink Cohen le Roux & Roodt Inc
Attorneys
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