| Mon 3 Jun 2002, 0:00 | | Acquisition Of Levingers Dry Clean And Shoe Clinic |
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ACQUISITION OF LEVINGERS DRY CLEAN AND SHOE CLINIC ("LEVINGERS") AND TLC DRY
CLEANERS, SHOE HOSPITAL AND UNIVERSAL DRY CLEANERS ("TLC") (COLLECTIVELY,
"THE BUSINESSES")
EXCELLERATE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Share code: EXL
ISIN: ZAE000026092
(Registration number 1997/009884/06) ("Excellerate")
ACQUISITION OF LEVINGERS DRY CLEAN AND SHOE CLINIC ("LEVINGERS") AND TLC DRY
CLEANERS, SHOE HOSPITAL AND UNIVERSAL DRY CLEANERS ("TLC") (COLLECTIVELY,
"THE BUSINESSES")
1. INTRODUCTION
Nedcor Investment Bank Limited is authorised to announce that
Excellerate, through a wholly-owned subsidiary, has acquired, with effect
from 1 January 2002, the businesses from Levi Cleaners cc and Kyriacos
Fardoulis , including the:
- sellers` rights to intellectual property;
- fixed assets of the businesses;
- stock;
- franchise contracts as at 1 January 2002 ("the effective date");
and
- goodwill,
subject to certain terms and conditions as more fully set out below
("the acquisitions").
2. RATIONALE
Excellerate`s strategy is to invest only in companies that reflect its
core competencies in outsourced services, trading and distribution, with the
emphasis on customer-centricity and specialised markets.
The ExcellServ division of Excellerate provides outsourced services,
which include contract cleaning, sanitation, pest elimination, washroom
hygiene, hospitality services, parking services, security services and the
distribution of janitorial supplies and consumable products.
Levingers performs same day dry cleaning services specialising in
deluxe and hand cleaning of delicate items, leather and suede. Levingers
also offers a "while you wait" tailoring, shoe repair and key-cutting
service. Levingers operates out of premier real estate environments
including major shopping centres and malls. Levinger`s target customer bases
are the A and B income consumers while TLC offers a similar dry cleaning and
shoe repair service to office workers and the emerging market.
The acquisitions will allow ExcellServ to expand its service offering
beyond the commercial and industrial markets to include individual
consumers. Levingers and TLC are synergistic with and complementary to the
ExcellServ businesses, Sterikleen and Cleancare.
TLC will also provide Excellerate with an opportunity to introduce
convenient dry cleaning, shoe repair and tailoring services within the
Parking Environment Management ("PEM") division of ExcellServ. This will be
achieved by locating new TLC depots within selected parking garages managed
by PEMS`s Interpark operation.
3. PURCHASE CONSIDERATION
The purchase price of the businesses is the aggregate of R17,5 million
plus the net of certain designated liabilities and stock amounting to
approximately R250 000 ("the purchase consideration").
If the profits after tax of the businesses (adjusted to exclude profits
arising from the opening of new or franchised stores) for the period ending
31 December 2002 ("the warranty period") exceed R3,5 million, then the
purchase consideration will be increased by an amount equal to R5,00 for
every R1,00 that such after tax profits exceed R3,5 million. Given the
profit history of the businesses Excellerate does not believe that the
adjusted after tax profits will exceed R3,5 million in the warranty period.
If a new franchise or new store is opened during the warranty period,
the purchase consideration will be increased by a maximum of R150 000 per
new franchise and by R5,00 for every R1,00 of new store after tax profits or
R100 000, whichever is the greater.
The purchase price will be discharged by payment of a maximum of R6
million on the implementation date (3 days after the fulfilment or waiver of
the conditions precedent set out in paragraph 5) and the balance of the
purchase price on the certification by Excellerate`s auditors of the
adjusted after tax profits of the businesses for the warranty period.
4. FINANCIAL EFFECTS
The financial effects of the acquisitions on Excellerate`s results for
the twelve months ended 31 December 2001 are presented as follows based on
the assumptions noted below:
Before the After the Percentage
acquisitions acquisitions change
31 December 31 December
2001 2001
(cents) (cents) (%)
Earnings per share 4,9 5,1 4,1
Headline earnings per
share 6,2 6,7 8,1
Net asset value per
share 56,3 56,3 0,0
Net tangible asset value
per share 30,2 21,4 (29,1)
Assumptions:
1. The after tax earnings used for the businesses are the annualised
results for the 10 months ended 31 December 2001.
2. The effect on net asset and net tangible asset value per share is based
on the assumption that the acquisitions were effective on 31 December 2001.
3. The effect on earnings and headline earnings per share is based on the
assumption that the acquisitions were effective from 1 January 2001 and that
Excellerate paid the purchase consideration in full on 1 January 2001 funded
partly out of cash resources and partly out of borrowings.
5. CONDITIONS PRECEDENT
The acquisitions are subject, inter alia, to the fulfilment of the
following conditions:
- the satisfactory conclusion of a due diligence investigation by
Excellerate;
- the approval of the JSE Securities Exchange, to the extent
required, of the acquisitions; and
- the necessary written consents and approvals of landlords and
franchisees to the cession and assignment of the sellers` rights and
obligations to Excellerate`s wholly-owned subsidiary with effect from the
effective date.
Sandton
3 June 2002
Investment bank and sponsor
NEDCOR INVESTMENT BANK
Corporate law advisers and consultants
EDWARD NATHAN & FRIEDLAND
Corporate Law Advisers and Consultants
Date: 03/06/2002 03:00:00 PM Produced by the SENS Department
