| Wed 13 Feb 2002, 0:00 | | Disposal Of The Rigid Plastics Division Of Malbak |
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MALBAK LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1946/022234/06)
JSE Share code: MLB ISIN: ZAE000004487
("Malbak")
DISPOSAL OF THE RIGID PLASTICS DIVISION OF MALBAK ("RIGIDS")
1. INTRODUCTION
SG Hambros South Africa is authorised to announce that Malbak has entered
into an agreement with a consortium, consisting of Mr G D de Jager (an
Executive Director of Malbak), Mr G J de Jager (a Non-executive Director of
Malbak) and Riverbank Limited (collectively, "the Consortium"), in terms of
which Malbak will dispose of Rigids to the Consortium with effect from 1
October 2001 ("the disposal"). The purchase consideration comprises R142,4
million payable in Rand and GBP7 million payable in Pound Sterling which, at
an exchange rate of R16,30: GBP1, amounts to a total consideration of R256,5
million.
The total consideration of R256,5 million differs from the amount of R290,9
million previously communicated to shareholders in the further joint
cautionary announcement published by Malbak and Nampak Limited ("Nampak") on
14 December 2001 regarding the proposed merger of Malbak and Nampak. The
change in consideration is a result of a movement in the Rand:Pound Sterling
exchange rate and an amendment to the agreement with the Consortium, whereby
the interest bearing debt attributable to Peteron Plastics (Pty) Limited in
Australia ("Peteron"), an amount equivalent to R40 million, will now be
assumed by the Consortium. The effective purchase consideration, exclusive
of the assumed debt, is therefore equivalent to R296,5 million.
2. THE DISPOSAL
2.1 The Rigids business
Rigids manufactures foamed styrene trays, thermoformed trays in a range of
polymers, PVC films and PVC and PET blowmoulded plastic containers and
injection moulded closures. Rigids comprises the businesses of Xactics
Packaging (in Johannesburg, Pinetown, Cape Town and Melbourne, Australia),
Kohler Versapak (in Paarl) and M.Y. Plastics (in Bridgwater and Aylesham,
United Kingdom).
2.2 Rationale for the disposal
Malbak's stated strategy is to be a focused packaging group and it has in
recent years narrowed its activities to concentrate on folding cartons and
flexible and rigid plastics. Rigids operates in a difficult market,
characterised by low selling prices, advances in technology and changes in
consumer packaging trends, which have resulted in poor financial returns for
this division. The inconsistent financial performance and the need for
significant further investment has recently resulted in a re-evaluation of
the continued fit of Rigids within the broader Malbak group.
During the merger negotiations with Nampak, Nampak indicated that it was not
interested in acquiring Rigids and, after a preliminary review, indicated
that it would not be prepared to match the offer consideration put forward
by the Consortium.
The disposal is consequently a pre-condition to the proposed offer by Nampak
to acquire the entire share capital of Malbak and to merge the respective
operations of the two groups.
2.3 Details of the disposal
Subject to the conditions precedent set out below, Malbak will dispose of
Rigids, excluding cash and interest bearing debt, other than the interest
bearing debt attributable to Peteron (an amount equivalent to R40 million),
but including all other liabilities, to the Consortium with effect from 1
October 2001.
The total cash consideration, payable on the fulfilment of the conditions
precedent, amounts to R256,5 million and is to be settled as follows:
- R142,4 million payable in Rand; and
- GBP7 million payable in Pound Sterling (equivalent to approximately R114,1
million at an exchange rate of R16,30: GBP1)
In addition, interest on the purchase consideration will accrue to Malbak
from 1 January 2002 until the date of completion of the disposal.
Malbak will utilise the proceeds from the disposal primarily to reduce off-
shore and on-shore interest bearing debt.
2.4 Management
Mr G D de Jager relinquished his role as Chief Executive Officer of Malbak
on 13 February 2002, but will remain the Executive Director responsible for
Rigids until the disposal becomes unconditional in all respects. Mr J A
Monks, the current Chief Operating Officer, will assume the role of Acting
Chief Executive Officer with immediate effect.
3. FINANCIAL EFFECTS
The pro forma financial effects of the disposal on Malbak's earnings per
share and headline earnings per share for the 12-month period ended 30
September 2001 and on its net asset value per share as at 30 September 2001,
are set out below:
Before After Change
(cents) (cents) (%)
Note 1 Note 2
Earnings per share 27,9 33,7 20,8
Headline earnings per share 30,2 33,1 9,6
Net asset value per share 331,1 260,5 (21,3)
Notes:
1. The earnings per share and headline earnings per share in the "Before"
column are in respect of the 12-month period ended 30 September 2001. The
net asset value in the "Before" column is extracted from Malbak's published
unaudited interim results for the six months ended 30 September 2001.
2. The earnings per share and headline earnings per share in the "After"
column assume that the disposal had come into effect on 1 October 2000, and
the consideration was applied to reduce off-shore and on-shore interest
bearing debt. The net asset value per share in the "After" column assumes
that the disposal had come into effect on 30 September 2001.
3. The financial effects have been calculated based on the number of voting
shares in issue of 477,2 million.
4. RELATED PARTY TRANSACTION
Mr G D de Jager and Mr G J de Jager are directors of Malbak and therefore
the Consortium is deemed to be a related party in terms of the Listings
Requirements of the JSE Securities Exchange South Africa ("JSE"). As such,
the members of the Consortium will be precluded from voting at the general
meeting of shareholders to be convened to approve the disposal.
5. CONDITIONS PRECEDENT
The disposal is subject to the fulfilment of the following conditions
precedent:
* approval by way of ordinary resolution by Malbak shareholders, excluding
the members of the Consortium, in general meeting;
* the granting of the requisite approvals from the JSE and the Exchange
Control Department of the South African Reserve Bank; and
* approval by the Competition Commission and such other regulatory
authorities as may be required.
6. GENERAL MEETING AND DOCUMENTATION
A general meeting of shareholders will be held to consider and, if deemed
fit, approve the disposal. A circular containing full details of the
disposal, and incorporating a notice convening the general meeting, will be
posted to Malbak shareholders in due course.
7. INDEPENDENT OPINION
The Listings Requirements of the JSE require that an independent financial
advisor opine as to whether the terms and conditions of the transaction are
fair and reasonable to shareholders. SG Hambros South Africa has been
appointed to provide such opinion, which opinion will be contained in the
circular to shareholders referred to above.
8. MERGER WITH NAMPAK
The merger proceedings with Nampak are progressing in line with expectations
and shareholders will be notified of developments in due course.
Johannesburg
13 February 2002
Financial advisor and transaction sponsor
SG Hambros South Africa
Sponsor
Rand Merchant Bank
A Division of FirstRand Bank Limited
Corporate Finance
Attorneys
in South Africa
Cliffe Dekker
in United Kingdom
DLA
Independent reporting accountants
Deloitte & Touche
