| Thu 6 Dec 2001, 0:00 | | Afribrand Holdings Limited - Disposal And Further |
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Afribrand Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/008992/06)
Share code : ABR
ISIN Number: ZAE000012969
("Afribrand" or "the company")
DISPOSAL AND FURTHER CAUTIONARY ANNOUNCEMENT
Continuing discussions with major stakeholders
Further to the provisional unaudited Results of Afribrand for the year ended
30 June 2001 announced on 31 October 2001, the Board of Afribrand is
continuing to facilitate discussions with the company's major stakeholders
and the banks to address the debt situation.
It is expected that these discussions will be concluded during December 2001
and a further announcement will be made before the end of December 2001
informing shareholders of the outcome of the discussions.
Recent disposal announcements
The dispatch of the circular relating to the Golden Wheat and Armato Snacks
transactions has been delayed as a result of the ongoing discussions with
major stakeholders and the banks. It is expected that this circular will be
despatched on or about 18 January 2002 - subject to the successful outcome
of the discussions with the major stakeholders and banks.
Disposal announcement
Afribrand's board of directors announces that Afribrand Trading (Pty) Ltd
("Afribrand Trading"), a wholly owned subsidiary of Afribrand, has entered
into an agreement ("the agreement") with Trackstar Trading (Pty) Ltd
("Trackstar"). The agreement provides, subject to the fulfilment of certain
suspensive conditions, for Trackstar to acquire certain assets from
Afribrand Trading, including the rights in and to the Dowmont trademark
(collectively "Dowmont"), pursuant to a management buy-out with effect from
1 December 2001. The disposal excludes the Dowmont chips factory.
Rationale for the transaction
The disposal forms 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.
Consideration
The disposal consideration for Dowmont is R2.5 million. The purchase
consideration shall be discharged as a post dated cheque dated 24 December
2001, by Trackstar, on 3 December 2001. Afribrand will grant Trackstar a
R700 000 interest free loan, refundable on 31 January 2001.
The value of the inventory as at 1 December 2001 shall be determined by an
audit carried out by the Auditors immediately following 1 December 2001. If
there is a shortfall between the value of the inventory as recorded in the
books of Afribrand Trading and the actual inventory as determined by the
auditors, Trackstar will not be required to assume liability to Afribrand
Trading for the amount of the shortfall.
Financial effects
Based on the published financial information of Afribrand for the year ended
30 June 2001, the pro-forma financial effects of the disposal of Dowmont 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 After Percentage
disposal disposal change
(cents) (cents) %
Net asset value per 4.6 (1) 4.1 (2) (10.9)
share
Loss per share (34.3) (1) (33.3) (3) 2.9
Headline loss per (19.3) (1) (18.4) (4) 4.7
share
1. The "before disposal" pro-forma financial information is based on the
published year results of Afribrand for the year ended 30 June 2001;
2. The "after disposal" net asset value per share has been calculated on the
assumption that the disposal took place as at 30 June 2001 and after taking
into account the loss on the disposal of R2.7 million which was based on the
net asset value of Dowmont of R4.5 million, which includes inventory which
will be written off amounting to R700 000, at that date and the cash
proceeds of R2.5 million;
3. The "after disposal" loss per share has been calculated on the assumption
that the disposal took place as at 1 July 2000. Earnings per share have
been adjusted to exclude the results of Dowmont for the year ended 30 June
2001 and to take into account the resulting loss of R2.0 million on the
disposal and the reduction in the interest charge, calculated at the prime
overdraft rate of 14.5%, which would have resulted, on the assumption that
the cash consideration was received on 1 July 2000; and
4. The "after disposal" headline earnings per share have been adjusted for
the effect of the loss on the disposal and other exceptional items of R2.3
million that related to Dowmont.
Circular
As the Dowmont disposal is classified as a Category 2 transaction, in terms
of the JSE Securities Exchange South Africa ("JSE") Listings Requirements,
full details of the transaction will be included in the circular that will
be dispatched on or about 18 January 2002.
Further cautionary
Shareholders are advised that the company is still involved in negotiations
to further affect 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
6 December 2001
Corporate Advisers and Sponsor
KPMG
