| Thu 31 May 2001, 0:00 | | Rebhold Limited - Disposal |
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Rebhold Limited
(Incorporated in the Republic of South Africa)
(Registration number 1995/004153/06)
("Rebhold")
Disposal of Jumbo Cash & Carry and certain Browns and Weirs stores to
Massmart
Disposal and/or closure of the remaining Browns and Weirs stores
Disposal of Sip `n Save wholesale liquor business to Massmart
Withdrawal of Rebhold from the wholesale cash and carry market
Creation of focused services group
Change of name to Rebserve Holdings Limited
Introduction
Further to the cautionary announcement dated 23 April 2001, Rebhold and
Tiger Food Brands Limited ("Tiger") have concluded written agreements ("the
sale agreements") in terms of which Rebhold and Tiger will, subject to
fulfilment of the conditions precedent ("the conditions") set out in
paragraph 9 below, sell to Massmart Holdings Limited ("Massmart"):
* The entire share capital of and shareholders claims on loan account
against Jumbo Cash & Carry (Proprietary) Limited ("Jumbo") with effect from
1 April 2001 ("the effective date"). Jumbo comprises the businesses carried
on by the six Jumbo stores and certain trademarks and trading names;
* The fixed assets, inventory, debtors, trade creditors, operating leases,
and employee obligations of twenty-two Browns Cash and Carry ("Browns") and
Weirs Cash and Carry ("Weirs") stores ("the sold Browns and Weirs stores")
to Jumbo which, subject to fulfillment of the conditions, will be owned by
Massmart, with effect from 30 June 2001
(collectively "the wholesale businesses ").
Furthermore, Rebhold will, subject to fulfilment of the conditions and the
sale of Jumbo becoming unconditional, sell to Massmart the business carried
on by Sip `n Save, a division of Picardi Liquors ("Proprietary") Limited
("the liquor business") with effect from 1 April 2001.
Rationale
Rebhold currently has two distinct and disparate divisions - services and
wholesale. These divisions have different risk profiles, growth prospects,
capital expenditure requirements, clients and suppliers, and require
substantially different core competencies and operational expertise.
Rebhold's stated intention is to focus on developing and expanding the high
growth services division and to entrench its position as South Africa's
dominant integrated services provider to the corporate and parastatal
sectors. Rebhold's directors believe that returns to shareholders will be
maximised in the long term as a result of this focused services strategy.
Accordingly, the wholesale and liquor interests are being disposed of or
closed as they are considered to be non-core to Rebhold's services strategy.
Nature of the businesses being sold
Jumbo operates through six stores in the urban areas of Gauteng, KwaZulu
Natal, the Northern Province and Free State as wholesalers of primarily
toiletries, cosmetics, health and beauty products, cigarettes, and a limited
range of groceries to smaller wholesalers, pharmacies, spazas and retailers
generally.
The twenty-two sold Browns and Weirs stores operate in the urban and rural
areas of KwaZulu Natal, Lesotho and the Eastern Cape as wholesalers of
groceries and basic food products, primarily to small retailers, spazas and
to a limited extent the public.
Sip `n Save operates as a liquor wholesaler, and also has the right to
distribute Namaqua wine.
Nature of the remaining Browns and Weirs assets and liabilities
The Browns and Weirs chain currently consists of a total of forty-one
stores. Rebhold and Tiger will dispose of the twenty-two sold Browns and
Weirs stores to Massmart as detailed above. It is expected that the
remaining nineteen Browns and Weirs stores will either be sold as going
concerns to independent wholesalers (including existing Browns and Weirs
management), or be closed with the result that Rebhold will have no exposure
to the wholesale cash and carry sector. Disposal and/or closure plans in
respect of these stores are well advanced. The anticipated disposal and/or
closure costs of the remaining Browns and Weirs assets and liabilities has
been fully provided for.
The sale consideration
The total sale consideration for the wholesale and liquor businesses is R490
million. The sale consideration due to Rebhold will be a cash payment of
R348,1 million, payable on fulfilment of the conditions by Massmart ("the
closing date"). Interest will be payable on the sale consideration from the
effective date until the closing date.
Application of the sale consideration
The sale consideration will be applied to grow and expand Rebhold's
integrated services businesses organically (including new facilities
management opportunities)and through selected acquisitions in the services
sector. Consideration will also be given to utilising surplus cash for share
buy backs.
Details of the sale agreements
The sale agreements incorporate such terms and warranties as are usual for a
transaction of this nature.
Financial effects
The table below sets out the financial effects of the sale on Rebhold's,
headline earnings per share ("Headlines EPS"), diluted headline earnings per
share ("diluted headline EPS") and tangible net asset value per share
("NAV") as disclosed in the unaudited interim results announcement for the 6
months ended 31 December 2000
Before After %change
(cents) (cents) increase
/(decrease)
Headline EPS 73.0 59.4 -19
Diluted headline EPS 70.5 57.3 -19
NAV 317.3 412.7 30
The above financial effects are based on the following:
Headline EPS and diluted headline EPS in the "Before" column reflects the ,
Headline EPS and diluted headline EPS for the six months ended 31 December
2000.
Headline EPS and diluted headline EPS in the "After" column represents the
pro forma effect of the sale on Headline EPS and diluted headline EPS
assuming:
* that the effective date of the sale of the wholesale and liquor businesses
was 30 June 2000,
* that Rebhold had disposed of the entire Jumbo, Browns and Weirs and liquor
business on 30 June 2000,
* that the sale consideration had been invested in an interest bearing
account at 10,5% per annum for the six month period ended 31 December 2000,
after making provision for the estimated costs of closing the remaining
Browns and Weirs stores on 30 June 2000, and
*all intangible assets in respect of the above businesses have previously
been written off.
NAV in the "Before" column reflects the NAV as at 31 December 2000. NAV in
the "After" column represents the pro forma effect of the sale of the
wholesale businesses and the liquor business on the NAV, assuming that the
sales had been effective on 30 June 2000.
Conditions precedent
The implementation of the sale is subject to,inter alia, the fulfilment of
the following conditions:
Massmart shareholders approve the transaction,
The approval, to the extent required, of all required documentation by the
Securities Regulation Panel ("SRP") and the JSE Securities Exchange South
Africa ("JSE"), and the approval of the Competition Commission.
Change of name and proposed changes to the board of directors
Subsequent to the disposal of the wholesale businesses and the liquor
business Rebhold will be reconstituted as a focused services group. The
company will change its name to Rebserve Holdings Limited to more fully
reflect the change in Rebhold's activities to a focused services group. The
composition of the board of directors will be altered in the foreseeable
future to reflect the group's services focus. Shareholders will be advised
of changes to the board at the appropriate time.
Disposal of remaining non-core businesses
It is Rebhold's intention to dispose of its remaining non-core businesses,
namely, its remaining liquor and beverages interests prior to the
announcement of its financial results for the year ending 30 June 2001.
Withdrawal of cautionary announcement
Shareholders are advised that as a result of the announcement of the sale of
the wholesale businesses and the liquor business, caution is no longer
required when dealing in Rebhold shares.
Circular
A circular containing full details of the sale of the wholesale businesses
and liquor business will be posted to Rebhold shareholders by no later than
28 June 2001.
Sandton
29 May 2001
Sponsor
Deutsche Securities
Member of the Deutsche Bank Group
Deutsche Securities (SA) (Proprietary) Limited
(Registration number 1995/011798/07)
Attorneys Reporting Accountants
Werksmans Attorneys Fisher Hoffman PKF
