| Mon 1 Oct 2001, 0:00 | | Don - Refinancing And Restructuring Of The Don Gro |
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Don Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1905/023123/06)
Share code:DON ISIN: ZAE000008462
("Don")
Refinancing and restructuring of The Don Group
1. Introduction
Shareholders are advised that Don has entered into an agreement with Ellwain
(Proprietary) Limited ("Ellwain") wherein Ellwain has advised that, in terms
of an agreement with Don's bankers, it has acquired Don's rights, title and
interest in and to the claims totalling R105 million which the banks have
ceded, assigned and transferred their rights to the securities to Ellwain.
2. The Transaction
2.1 Terms of the transaction
In terms of the agreement entered into between the company and Ellwain,
Ellwain will acquire certain properties from Don for a total consideration
of R105 million. Don will no longer operate the properties known as Don
Wanderers, Don Illovo, Don Rosebank II, Don Gardens, Don Arcadia III and the
Rudd Road property. Don will continue to operate Arcadia 1, Arcadia 2,
Rosebank 1, Bruma, Sandton 1, Sandton 3, Sandton 4, Seapoint and Isando.
Don will pay a monthly rental of R512 000 to Ellwain in respect of the above-
mentioned properties. Don will at any time during the first three-year lease
period be entitled to purchase the properties that are leased from Ellwain.
2.2 Rationale
In line with the company's efforts to continue with its financial re-
structuring and to reduce the level of gearing, the directors have decided
to dispose of the above-mentioned properties to Ellwain. After the
transaction has been implemented, Don will continue to operate as a suite
hotel group. This transaction eliminates the need for any alliances and the
group will continue to operate under real controlling black ownership that
is operationally effective. The company will:
- no longer be encumbered with debt;
- focus on profitable hotels;
- be able to continue as a going concern;
- have a net asset value representative of its real underlying value;
- be strongly cash positive;
- continue to enhance the operational trend reflected in the financial year
ended June 30, 2001; and
- continue to be represented in the major metropolitan centres of Cape Town,
Johannesburg, Sandton and Johannesburg.
3. Conditions precedent
Implementation of the transaction is conditional, inter alia, upon:
JSE Securities Exchange South Africa ("JSE") approval; and
Shareholders' approval in general meeting.
4. Financial effects of the Transaction
The table below illustrates the financial effects of the transaction.
Before After Percentage
disposal Disposal change
(cents)
(cents) 1
Net asset
value per 8,0 9,2 15,0
share
Loss per (27,1) (26,6) 2 (1,9)
share
Headline
loss per (0,5) (0,1) 2 (80,0)
share
1 Based on the audited results for the year ended 30 June 2001.
2 Based on the results of the continuing hotel operations plus interest
which Don would have earned had an amount equivalent to the cash resulting
from the disposal been invested for a twelve-month period from 1 July 2000
to 30 June 2001 at an interest rate of 10% per annum compounded monthly
assuming that the transaction took place on 1 July 2000.
Related Party
In terms of the requirements of the JSE, Messrs Marc Wainer and Sydney
Ellerine are related parties in respect of this transaction. Marc Wainer is
a director of both Don and Ellwain and Sydney Ellerine is a director of Don
and is also associated with Ellwain. Both directors will not vote on the
resolutions that may be necessary to approve this transaction.
Withdrawal of cautionary
Don shareholders are advised that, following this announcement, caution is
no longer required in dealing in Don shares.
7. Documentation
A circular containing full details of the transaction and of the general
meeting of shareholders will be posted to the shareholders in due course.
Johannesburg
28 September 2001
Sponsor Auditors
Investec Securities Fisher Hoffman PKF
