| Tue 21 Aug 2001, 0:00 | | Afribrand - Restructuring, Banking Facilities, Dis |
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FURTHER CAUTIONARY
AFRIBRAND HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/008992/06)
("Afribrand" or "the company")
Share code: ABR
ISIN code: ZABR 000012969
RESTRUCTURING, BANKING FACILITIES, DISPOSAL ANNOUNCEMENT AND
FURTHER CAUTIONARY ANNOUNCEMENT
RESTRUCTURING
The board of directors of Afribrand wishes to announce that Afribrand,
whilst still experiencing difficulties, is progressing with its
restructuring programme to return the business to profitability and reduce
debt to acceptable levels.
The restructuring programme involves the following key initiatives:
* The enhancement of management information systems;
* The improvement of working capital management;
* The rationalisation of product lines;
* The reduction of central and overhead costs; and
* The disposal of under-utilised assets;
More recently, the restructure programme has been extended to include the
following:
* The decentralisation of operations.
* The disposal of certain unprofitable and non-core businesses; and
* A change to the group's funding structure.
Banking facilities
In line with the restructuring of the group, Afribrand has arranged longer
term facilities with its bankers which are regarded by management as
sufficient for the future needs of the business as determined by their
recent budgeting process.
Disposal announcement
Further to the restructuring initiatives, Afribrand's board of directors
announces that the company has entered into an agreement ("the agreement")
with Cannon Gate Trading (Proprietary) Limited ("Cannon"). The agreement
provides, subject to the fulfilment of certain suspensive conditions, for
Cannon to acquire the business of the Golden Wheat Biscuits division
("Golden Wheat ") of Afribrand, as a going concern, with effect from 31 July
2001.
Nature of the business of Golden Wheat
Golden Wheat is a manufacturer and supplier of biscuits to the wholesale and
retail markets.
Rationale for the transaction
The disposal of Golden Wheat is part of the restructuring initiatives to
dispose of unprofitable and non-core businesses. The proceeds of the
disposal will be used to reduce the total debt of the group.
Suspensive conditions
The agreement is subject to, inter alia, the following suspensive
conditions:
* The approval of the Competition Commission;
* The successful raising of finance by the purchaser; and
* The approval of the relevant documentation by the Securities Regulation
Panel, the JSE Securities Exchange South Africa ("JSE") and the South
African Reserve Bank.
Consideration
The disposal consideration of R7.2 million will be settled in cash and will
be held in escrow or trust account until such time as the suspensive
conditions are met.
Financial effects
Based on the interim financial information of Afribrand for the six months
ended 31 December 2000, the pro-forma financial effects of the disposal of
Golden Wheat on Afribrand's net asset value per share, loss per share and
headline loss per share are set out below. This pro forma financial
information has been prepared for illustrative purposes only and because of
its nature may not give a true picture of Afribrand's financial position and
results of operations.
Before disposal After disposal Percentage
(cents) (cents) change %
Net asset value per share 26,5 (1) 23,4 (2) (11,7)
Loss per share (14,5) (1) (11,3) (3) 22,0
Headline loss per share (11,4) (1) (6,8) (4) 40,0
1 The "before disposal" pro-forma financial information is based on the
published interim results of Afribrand for the six months ended 31 December
2000;
2 The "after disposal" net asset value per share has been calculated on the
assumption that the disposal took place at 31 December 2000 and after taking
into account the loss on the disposal of R14.2 million and the corresponding
cash proceeds of R7.2 million;
3 The "after disposal" loss per share has been calculated on the assumption
that the disposal took place at 1 July 2000. Earnings per share have been
adjusted to exclude the results of Golden Wheat for the 6 months ended 31
December 2000, to take into account the resulting loss of R14.2 million on
the disposal and the reduction in the interest charge, calculated at the
prime overdraft rate, which would have resulted, on the assumption that the
cash consideration was received on 1 July 2000.
4 The "after disposal" headline earnings per share have been adjusted for
the effect of the loss on the disposal and items of R7.4 million that
pertained to Golden Wheat.
Circular
As the Golden Wheat disposal is classified as a Category 1 transaction in
terms of the JSE Listings Requirements, a circular specifically seeking
shareholders' approval for, and containing details of the Golden Wheat
disposal will follow in due course.
Further Cautionary Notice
Shareholders are advised that the company is involved in further
negotiations to further effect the restructuring initiatives, which if
successfully concluded, may have a material effect on the price at which the
company's shares trade on the JSE.
Shareholders are accordingly advised to continue to exercise caution in
dealing with their Afribrand shares until a further announcement in this
regard is made.
Johannesburg
21 August 2001
Corporate Advisers and Sponsor
KPMG
