| Thu 7 Jun 2001, 0:00 | | Northern Engineering Industries Africa Limited -de |
|
NORTHERN ENGINEERING INDUSTRIES AFRICA LIMITED
1. Introduction
As announced in the press on 6 April 2001, NEI and its subsidiaries have
entered into a sale agreement with Alstom South Africa (Proprietary) Limited
("Alstom"). The agreement provides, subject to the fulfilment of certain
suspensive conditions, for Alstom to acquire the businesses and assets of
the operating divisions of NEI Operations together with the land and
buildings of the various property owning companies in the NEI Operations
group, as going concerns. It also provides for Alstom to acquire certain
specific assets of the head office division of NEI Operations and certain
specific liabilities of the operating divisions of NEI Operations.
2. Rationale
The proposed disposal is a good opportunity for NEI shareholders to realise
their investment as NEI shares have traded at a discount to the net asset
value of the company for a long time.
In addition, the disposal would be in line with industry consolidation in a
difficult market.
3. Consideration
Due diligence and environmental investigations have been completed and the
purchase price payable by Alstom on the completion date, anticipated to be
18 July 2001, is R186,3 million, subject to any claim for a price reduction
in the event of breach of warranty.
The purchase price will bear interest in a fixed amount of R4 million for
the period between the effective date, being 1 April 2001, and the
completion date.
After implementation of the proposed disposal, NEI Operation's assets will
consist of cash and shares in dormant subsidiaries that are to be
deregistered. The cash will, subject to the passing of the necessary special
resolution, be distributed to NEI shareholders pursuant to a members'
voluntary winding-up of NEI. As soon as possible after the voluntary winding-
up has been finalised to the satisfaction of the Master of the High Court of
South Africa, NEI (in liquidation) will pay the cash held by it as a
liquidation dividend, estimated to be 1 100 cents per share, to NEI
shareholders who are registered as such on the record date, being Friday, 27
July 2001.
4. Financial effects
Based on the published audited financial information of NEI for the year
ended 31 December 2000, the pro forma financial effects of the disposal on
NEI's net asset value per share, earnings per share and headline earnings
per share, and the financial effects of the distribution to NEI's
shareholders, by way of a liquidation dividend, on net asset value per
share, earnings per share and headline earnings per share are set out below:
Before the After the At
disposal disposal Change distribution Change
Per NEI share (cents) (cents) % (cents) %
Market price:
26 March 2001 740(1) 1 277(6) 72,6 1 100(8) 48,6
6 June 2001 1 050(2) 1 277(6) 21,6 1 100(8) 4,8
Net asset value 1 464(3) 1 277(6) (12,8) 1 100(8) (24,8)
Earnings per share 119(5) 110(4) (5,3) 88(7) (26,4)
Headline earnings
per share 119(5) 110(4) (5,3) 88(7) (26,4)
Notes:
1. Based on the closing price of NEI shares on 26 March 2001, the last
trading day prior to the publication of the first cautionary announcement
relating to the disposal agreement;
2. Based on the closing price of NEI shares on 6 June 2001, the last
practical trading day prior to the publication of this announcement;
3. As at 31 December 2000;
4. The pro forma income attributable to NEI on the cash consideration in
respect of the disposal (see note 6) assuming that the cash had been
invested for the 12-month period ended 31 December 2000 and had earned
interest at an after-tax daily compounded rate of 7,67%;
5. For the year ended 31 December 2000;
6. Based on the cash consideration to be received by NEI in respect of the
disposal;
7. The pro forma income attributable to an NEI shareholder on the cash
consideration (see note 8) assuming that the cash had been invested for the
12-month period ended 31 December 2000 and had earned interest at an after-
tax daily compounded rate of 7,67;
8. The cash consideration, after closure costs, to be distributed to NEI
shareholders by way of a liquidation dividend.
5. Opinions, recommendations and undertakings
KPMG, the independent financial adviser to NEI, has considered the terms and
conditions of the disposal and is of the opinion that the terms and
conditions are fair and reasonable to NEI shareholders. The directors of NEI
also recommend that NEI shareholders vote in favour of the resolutions to be
proposed at the general meeting to approve the disposal.
The directors of NEI, with direct and/or indirect interests in NEI, intend
to vote in favour of all the resolutions proposed at the general meeting.
6. Suspensive conditions
The disposal is still subject to the fulfilment of the following suspensive
conditions:
- the approval by NEI shareholders in general meeting of the disposal, in
accordance with the requirements of the SRP and the Listings Requirements of
the JSE Securities Exchange South Africa (JSE);
- the approval of the South African Reserve Bank, to the extent required for
the implementation of the sale agreement; and
- the approval by the Competition Commission of the change in control to be
brought about by the implementation of the transaction.
7. Salient dates and times
Last day for lodging of forms of proxy in respect of the resolutions to be
proposed at the NEI general meeting by not later than 16:00 on Thursday, 12
July 2001
NEI general meeting to be held at 16:00 on Monday, 16 July 2001
The record date (NEI shareholders should be registered as such by close of
business on this date in order to participate in the liquidation dividend)
Friday, 20 July 2001
Termination of the listing of NEI shares Monday, 23 July 2001
Notes:
1. All dates and times indicated above are subject to amendment, which will
be published in the South African press.
2. All dealings on the JSE in NEI shares during the week ending on the
record date, which is expected to be Friday, 20 July 2001, will be for
immediate settlement.
8. Circular
A circular to shareholders setting out full details of the proposed
disposal, the distribution by and voluntary winding-up of NEI, including a
notice of general meeting, is to be posted on Friday, 22 June 2001.
Johannesburg
8 June 2001
Corporate advisor and sponsor
KPMG
Attorneys
Deneys Reitz Attorneys
Legal advisors to Alstom
Brink Cohen Le Roux & Roodt INC
Attorneys
Reg No 1993/004501/21
