| Fri 14 Dec 2001, 0:00 | | Afribrand Holdings Limited - Disposal Announcement |
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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" or "the group")
Share code: ABR
ISIN code : ZAE 000012969
DISPOSAL ANNOUNCEMENT AND FURTHER CAUTIONARY
Disposal announcement
Afribrand (Pty) Ltd, a wholly owned subsidiary of Afribrand, has entered
into a sale of business agreement ("the agreement") with OTK Limited
("OTK"). The agreement provides, subject to the fulfilment of certain
suspensive conditions, for OTK to acquire the entire business of the Farm
Feed Services division ("Farm Feed") of Afribrand (Pty) Ltd, as a going
concern, with effect from 1 December 2001 ("the effective date").
The net assets to be disposed of in terms of the agreement include the
debts, fixed assets, leased assets, stock, accounts payable, provisions and
all the rights, title and interest, of Afribrand (Pty) Ltd, in and to the
marks, contracts and goodwill, if any ("the net assets").
Nature of the business of Farm Feed
The business of Farm Feed is that of trading in agricultural commodities.
Rationale for the transaction
The disposal forms part of the restructuring initiatives to dispose of non-
core businesses and the proceeds of the disposal will be used to reduce the
total debt of the group.
Suspensive conditions
The agreement with OTK is subject to, inter alia, to the following material
suspensive conditions on or before 28 February 2002:
- Afribrand shareholder approval in general meeting;
- the Competition authorities approving the acquisition of the business of
Farm Feed by OTK;
- the effective date accounts are prepared, audited and signed by the
auditors and directors of Afribrand (Pty) Ltd without qualification and
delivered to OTK by no later than 31 December 2001.
Consideration
The total consideration amounts to R18 million.
Afribrand (Pty) Ltd warrants that the working capital as at 1 December 2001,
shall not be less than R1.9 million. If the working capital as reflected in
the effective date accounts is less than R1.9 million, Afribrand (Pty) Ltd
shall pay the shortfall in the working capital ("working capital shortfall")
to OTK in six equal monthly instalments commencing on the first business day
of the first month immediately following the closing date (being 14 days
after the fulfilment of the suspensive conditions). If the working capital
is greater than R1.9 million as at 1 December 2001, OTK shall pay the
difference to Afribrand (Pty) Ltd on the closing date, in cash.
Financial effects
Based on the provisional unaudited financial information of Afribrand for
the year ended 30 June 2001, the pro-forma financial effects of the disposal
of Farm Feed, the disposal of Golden Wheat, details of which were announced
on 22 August 2001, and the combined effect of the disposals of the Golden
Wheat Biscuits Division ("Golden Wheat"), certain assets of Afribrand
Trading (Pty) Ltd including the rights in and to the Dowmont trademark
(collectively "Dowmont") and Farm Feed (collectively "the disposals") 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 *After Combined
disposals the Farm the After the percentage
(cents) Feed Golden combined change
disposal Wheat disposals %
(cents) disposal (cents)
(cents)
Net asset 4.6 (1) 9.7 (2) 4.6 (5) 9.3 (8) 102.3
value per
share
Loss per (34.3) (29.7) (24.6) (19.1) 44.3
share (1) (3) (6) (9)
Headline loss (19.3) (20.0) (16.2) (16.1) 16.6
per share (1) (4) (7) (10)
Ordinary
shares in 454 955 454 955 454 955 454 955
issue (000's)
Weighted
average
ordinary 454 955 454 955 454 955 454 955
shares in
issue (000's)
* The Golden Wheat financial effects have been recalculated based
on the provisional unaudited financial results of Afribrand for
the year ended 30 June 2001.
1 The "before disposals" pro-forma financial information is based on the
provisional unaudited financial results of Afribrand for the year ended 30
June 2001;
2 The "after the Farm Feed disposal" net asset value per share has been
calculated on the assumption that the disposal took place as at 30 June
2001. In arriving at this, the net assets of Farm Feed at 30 June 2001 of
(R5.3) million were used. The actual net assets at 1 December 2001 will
determine the actual profit or loss arising on the transaction and the pro-
forma calculation set out above is for illustrative purposes only. It is
anticipated that the net assets at 1 December 2001 in the audited effective
date accounts will be R3.9 million and the anticipated actual profit on sale
will be R14.1 million;
3 The "after the Farm Feed disposal" loss per share has been calculated on
the assumption that the disposal took place as at 1 July 2000 for a cash
consideration of R18 million. Losses per share have been adjusted to
exclude the results of Farm Feed for the year ended 30 June 2001, to take
into account the resulting profit on the disposal and the reduction in the
interest charge (calculated at the prime overdraft rate of 14.5%). The pro
forma calculation assumes that the working capital at 30 June 2000 amounted
to R1.9 million and a price adjustment, as described in the consideration
paragraph above, has not been taken into account;
4 The "after the Farm Feed disposal" headline loss per share has been
adjusted to take into account the profit on the disposal and other
exceptional items relating to Farm Feed amounting to R680 000;
5 The "after the Golden Wheat disposal" net asset value per share has been
calculated on the assumption that the Golden Wheat disposal took place as at
30 June 2001 and after taking into account the profit on the Golden Wheat
disposal of R238 000 which was based on the net asset value of Golden Wheat
of R7.1 million at that date and the total cash consideration of R7.3
million;
6 The "after the Golden Wheat disposal" loss per share has been calculated
on the assumption that the Golden Wheat disposal took place as at 1 July
2000. Earnings per share have been adjusted to exclude the results of
Golden Wheat for the year ended 30 June 2001, to take into account the
resulting profit of R238 000 on the disposal and the reduction in the
interest charge, calculated at the prime rate of 14.5 %, which would have
resulted, on the assumption that the cash consideration was received on 1
July 2000;
7 The "after the Golden Wheat disposal" headline loss per share has been
adjusted for the effect of the profit on the Golden Wheat disposal of R238
000 and other exceptional items relating to Golden Wheat;
8 The "after the combined disposals" net asset value per share has been
calculated on the assumption that the disposals took place as at 30 June
2001 and after taking into account the combined profit on the disposals of
R21.5 million;
9 The "after the combined disposals" loss per share has been calculated on
the assumption that the disposals took place as at 1 July 2000. The loss
per share has been adjusted to exclude the results of Dowmont, Golden Wheat
and Farm Feed for the year ended 30 June 2001, to take into account the
resulting combined profit of R21.5 million on the disposals and the
reduction in the interest charge (calculated at the prime rate of 14.5 %);
and
10 The "after the combined disposals" headline loss per share has been
adjusted for the effect of the profit on the disposals and other exceptional
items relating to Dowmont, Golden Wheat and Farm Feed amounting to R32.7
million.
Circular to shareholders
The Farm Feed disposal is classified as a Category 1 transaction in terms of
the JSE Listings Requirements. A circular including details of the Dowmont,
Golden Wheat and Farm Feed transactions and seeking shareholder approval for
the Golden Wheat and Farm Feed disposals will be posted on or about 18
January 2002.
Further to the Armato Snacks disposal announcement
Further to the announcement dated 24 October 2001 regarding the disposal by
Afribrand (Pty) Ltd of the major part of the business of Armato Snacks, as a
going concern, shareholders are advised that the purchaser, Ibiza Trading 4
(Pty) Ltd, has failed to fulfill certain of the suspensive conditions
contained in the sale of business agreement. As a result, the sale of
business agreement shall have no force or effect and the major part of
Armato Snacks will no longer be sold to Ibiza Trading 4 (Pty) Ltd.
Further Cautionary Notice
Shareholders are advised that the company is still facilitating negotiations
with its major stakeholders and banks to address the debt situation. If
these negotiations are successfully concluded, they 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
13 December 2001
Corporate Adviser and Sponsor Joint Corporate Advisor
KPMG Brait
