| Fri 5 Oct 2001, 0:00 | | Furnex - Disposal Of The Shares In And Claims On L |
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Furnex Capital Limited
(Incorporated in the Republic of South Africa)
(Registration number 1945/018543/06)
Share code: FRC ISIN: ZAE000022778
("Furnex" or "the company")
Disposal of the shares in and claims on loan account against
Furnex Consumer Credit (Proprietary) Limited ("Furnex CC")
to Credcor Limited ("Credcor"), a subsidiary of BoE Bank Limited ("BoE")
1. Introduction
Further to the cautionary announcement dated 24 August 2001, Investec Bank
Limited is authorised to announce that agreement has been reached in terms
of which, subject to the fulfilment of the conditions precedent set out in
paragraph 5 below ("the conditions precedent"), Furnex will dispose of its
shares in and claims on loan account against Furnex CC, with effect from 1
April 2001 ("the effective date"), for a consideration of R38 million to be
settled in cash ("the disposal").
At present, Furnex owns 50% of the shares in Furnex CC, whilst BoE,
through its wholly-owned subsidiary, Credcor, holds the remaining 50% of the
issued share capital of Furnex CC and since the inception has exercised
management control over the operations of
Furnex CC.
The disposal by Furnex of the shares in and claims on loan account against
Furnex CC falls under section 228 of the Companies Act, 1973 (Act 61 of
1973), as amended, and is subject to the jurisdiction of the Securities
Regulation Panel ("SRP").
2. Rationale
Although Furnex CC has shown very strong growth, with an increase in the
monthly turnover of goods financed by Credcor through Furnex retailers, the
directors of Furnex are of the opinion that the financing of consumer goods
is not core to the operations of Furnex. The disposal provides Furnex with
an opportunity to realise the increased value of Furnex CC and to exit the
business.
3. Salient terms of the disposal
Subject to the fulfilment of the conditions precedent, Credcor will
acquire Furnex's shares in and claims on loan account against Furnex CC from
Furnex, with effect from the effective date.
3.1 The purchase consideration
The purchase consideration will be settled by the payment in cash of R38
million on the date that the conditions precedent have been fulfilled or
waived, as the case may be, which date is expected to be during November
2001 ("the closing date") (together with interest thereon at daily prime
rates from 1 October 2001 to date of payment).
3.2 Warranties
Furnex has given no material warranties, representations, undertakings,
promises or the like to Credcor in relation to the shares, the claims or the
company.
4. Financial Effects
The table below sets out the pro forma financial effects of the disposal
on a Furnex shareholder, based on the following:
the fully diluted headline earnings per Furnex share in the "Before"
column are based on the published unaudited interim results of Furnex for
the six months ended 31 March 2001;
the fully diluted headline earnings per Furnex share in the "After"
column are based on the published unaudited interim results of Furnex for
the six months ended 31 March 2001, excluding the unaudited interim results
of Furnex CC for the six-month period ended 31 March 2001 and including the
after tax interest which would have been earned had an amount equivalent to
the purchase consideration been invested for a six-month period at an after
tax interest rate of 7% per annum;
the net tangible asset value per Furnex share in the "Before" column is
based on the published unaudited position of Furnex at 31 March 2001; and
the net tangible asset value per Furnex share in the "After" column is
based on the assumption that the disposal had been implemented on 31 March
2001.
Six months ended
31 March 2001
Actual Pro forma
"Before" "After" %
Per Furnex Share (cents) (cents) change
Fully diluted headline
earnings 9,03 8,82 (2,33)
Net tangible asset value 50,33 71,22 41,51
5. Conditions precedent
The disposal is conditional upon, inter alia, the following conditions
being fulfilled:
the passing of the requisite resolutions by Furnex shareholders in
general meeting to approve and implement the disposal;
the approval of the JSE Securities Exchange South Africa ("JSE") and the
SRP;
the approval in terms of section 13 (3) of the Competition Act, 1998
(Act 89 of 1998), as amended, of the disposal;
the South African Reserve Bank approving the disposal, insofar as it may
be necessary; and
the approval of any other regulatory authorities, which may be required
in order to implement the disposal.
6. Listing on the JSE
Subsequent to the disposal, Furnex will still meet the listing
requirements of the JSE and will therefore remain listed in the Financial -
"Financial Services" sector of the JSE lists.
7. Documentation
A circular containing full details of the disposal and a notice convening
a general meeting of shareholders of Furnex is in the course of preparation
and subject to the approval of the JSE and SRP, will be posted to Furnex
shareholders in due course.
8. Further cautionary announcement
Further to the cautionary announcement, dated 24 August 2001, Furnex
shareholders are advised that further negotiations are in progress which, if
successfully concluded, may have a material effect on the price of the
company's shares.
Accordingly, Furnex shareholders are advised to continue exercising
caution when dealing in the company's shares until a detailed announcement
is made.
Johannesburg
5 October 2001
Corporate advisor
Investec Bank Limited
(Registration number 1969/004763/06)
Sponsor
Investec Securities Limited
Member of the JSE
(Registration number 1972/008905/06)
Attorneys
Fluxman Rabinowitz Raphaely Weiner Inc.
