| Tue 11 Sep 2001, 0:00 | | Dawn - Disposal Of The Sheerline Business And With |
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Announcement
DISTRIBUTION AND WAREHOUSING NETWORK LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1984/008265/06)
Share code:DAW ISIN code:ZAE000018834
("DAWN")
ANNOUNCEMENT REGARDING THE DISPOSAL OF THE SHEERLINE BUSINESS
AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the cautionary announcement dated 31 August 2001, Argil Corporate
Finance (Proprietary) Limited is authorised to announce that agreement has
been reached between DAWN, Sheerline Aluminium Systems (Proprietary) Limited
("Sheerline"), Inex Trading (Proprietary) Limited ("Inex") and Africa Glass
Industries Limited ("AfGlass") in terms of which Sheerline and Inex ("the
sellers"), will dispose of the assets and business conducted as Sheerline
Aluminium Systems ("the Sheerline business"), excluding a cash balance of R7
068 000 ("the excluded cash"), as a going concern, to Afglass, with effect
from 28 July 2001 ("the disposal").
Sheerline and Inex are wholly-owned subsidiaries of DAWN. The Sheerline
business is that of trading and distribution of aluminium products and
systems.
2. Rationale for the disposal
Over the past two years DAWN has systematically grown its wholesale and
distribution business and disposed of its non-core manufacturing assets,
which included the disposal of Almar Aluminium (Proprietary) Limited
("Almar") on 1 June 2000. The disposal of Almar, an aluminium extruder, has
left DAWN with only the Sheerline business still operating in the aluminium
market. The board of directors of DAWN has resolved to dispose of the
Sheerline business in line with DAWN's withdrawal from the aluminium
industry.
3. Disposal proceeds
The disposal price of R16 932 000 is payable in cash and will be settled by
Afglass on the seventh business day following the date on which the
suspensive conditions as set out in paragraph 5 below have been fulfilled
("the completion date"). The disposal price will attract interest at a rate
of 9% per annum from 15 September 2001 until the completion date. The
disposal price together with the excluded cash result in aggregate disposal
proceeds from the disposal of R24 000 000.
It is the intention of DAWN to utilise the disposal proceeds to fund its
share buy back strategy.
4. Financial effects
The pro forma financial effects of the disposal on the headline earnings,
net asset value and tangible net asset value per DAWN share, before and
after the disposal, are set out below:
Before After Change
Per DAWN share Notes (cents) (cents) (%)
Headline earnings 1 8,00 7,89 (1,38)
Net asset value 2 31,48 34,68 10,17
Net tangible asset value 2 31,18 34,37 10,23
Notes:
1. Based on the unaudited results for the six months ended 31 December 2000.
The amount in the "After" column represents the earnings that would have
accrued per DAWN share had the disposal been effective 1 July 2000 and had a
financing cost saving been effected, at the prime rate of interest of the
Standard Bank of South Africa, resulting from the disposal proceeds and the
excluded cash.
2. Based on the unaudited net asset value and tangible net asset value as
disclosed in the unaudited results for the six months ended 31 December
2000.
3. The headline earnings per DAWN share, before and after the disposal, was
calculated using 288 805 024 DAWN shares, being the weighted average DAWN
shares in issue for the six months ended 31 December 2000.
4. The net asset value and tangible net asset value per DAWN share, before
and after the disposal, was calculated using 294 944 698 DAWN shares, being
the total DAWN shares in issue at 31 December 2000.
5. Suspensive conditions
The disposal of the Sheerline business is subject to the following
suspensive conditions:
- approval by DAWN in its capacity as shareholder of the sellers in
accordance with section 228 of the Companies Act 1973, (Act 61 of 1973), as
amended;
- approval by the respective boards of directors of the sellers and Afglass;
- the sellers and/or DAWN obtaining written approval from ABSA Bank Limited
for the release of security granted in its favour pertaining to the sellers
and its business;
- Afglass entering into a service agreement with the present manager of the
Sheerline business;
- Afglass completing a due diligence review to its satisfaction of the
Sheerline business; and
- approval of the disposal by the Competition Commission.
6. Withdrawal of cautionary announcement
Shareholders are referred to the cautionary announcement dated 31 August
2001 and are advised that, as full disclosure regarding the Sheerline
disposal in terms of this announcement has been made, caution is no longer
required.
Johannesburg
11 September 2001
Corporate adviser
Argil Corporate Finance (Pty) Ltd
(Registration number 2000/012659/07)
Sponsor
Deloitte & Touche Sponsor Services (Pty) Ltd
(Incorporated in the Republic of South Africa)
(Registration number 1996/000034/07)
Legal adviser
Hofmeyr Herbstein Gihwala Cluver & Walker Inc.
Registration number 1997/001523/21
