| Mon 26 Oct 2020, 16:12 | | CROOKES BROTHERS LIMITED - Disposal of High Noon property |
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Disposal of High Noon property
CROOKES BROTHERS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1913/000290/06)
Share code: CKS
ISIN: ZAE000001434
(“Crookes Brothers” or “the Company”)
DISPOSAL OF HIGH NOON FARM AND THE RENTAL ENTERPRISE CONDUCTED THEREON
(THE “PROPERTY”) BY CROOKES BROTHERS (SOUTH AFRICA) PROPRIETARY LTD, A
WHOLLY OWNED SUBSIDIARY OF THE COMPANY, TO HIGH NOON FARMS PROPRIETARY
LIMITED ("PROPCO") AND THE INVENTORY AND MOVABLE ASSETS OF THE PROPERTY TO
PROPCO’s ASSOCIATED COMPANY, THEDDAN FARMS PROPRIETARY LTD ("OPCO")
1. INTRODUCTION
Crookes Brothers’ shareholders (“Shareholders”) are advised that on 23 October 2020 the Company
via its subsidiary, Crookes Brothers South Africa Proprietary Limited (the “Seller”), concluded the
commercial terms of agreements in terms of which it will, subject to the fulfilment of certain conditions
precedent, as one indivisible transaction dispose of the Property to Propco and the inventory and
movable assets situated on the Property, as a going concern ('the Business") to Opco, which
disposals are collectively referred to as the Disposal. Propco and Opco are collectively referred to as
the “Purchaser” and the aggregate purchase consideration is approximately R95 million, as detailed
in paragraph 4.2 below. Neither Propco nor Opco are a related party of the Company.
2. RATIONALE AND BACKROUND TO THE DISPOSAL
Crookes Brothers is a South African public company with agricultural operations in the KwaZulu-Natal,
Mpumalanga and Western Cape provinces of South Africa, as well as in Eswatini, Zambia and
Mozambique. It listed on the main board of the JSE in 1948. The Company specialises in the
production of primary agricultural products, including sugar cane, bananas, deciduous fruit and
macadamia nuts. Regarding the use of capital, the board of directors of the Company (the “Board”)
has recognised the need to establish a portfolio of projects where each project performs at a level
which will provide shareholders with the required return on their capital. To this end, mindful of the
need for crop and geographical diversification, we have initiated processes to sell some of our farms
that are not generating returns commensurate with our target, one of which is the Property and its
Business. It is intended that the funds realised from the sale of such assets will enable Crookes
Brothers to reduce its financial gearing and to assist in completing major diversification projects.
3. SUBJECT MATTER OF THE DISPOSAL
The subject matter of the Disposal is the Property, which includes the following:
3.1 Farm 524 known as "Klein Tafelberg", situated in Worcester Road, Matroosberg, Western
Cape Province, measuring 319.1781 hectares in extent,;
3.2 Portion 2 of Farm 5 known as "Elands Kloof", situated in Caledon, in the Theewaterskloof
Municipality, Western Cape Province, measuring 462.3845 hectares in extent,
3.3 the Remaining Extent of portion 4 of Farm 5 known as "Elands Kloof", situated in Caledon, in
the Theewaterskloof Municipality, Western Cape Province, measuring 828.9646 hectares in
extent;
3.4 Portion 7 of Farm 5 known as "Elands Kloof", situated in Caledon, in the Theewaterskloof
Municipality, Western Cape Province measuring 66.7506 hectares in extent, held under
Transfer Deed No T15610/2014; and
3.5 Portion 17 of Farm 5 known as "Elands Kloof", situated in Caledon, in the Theewaterskloof
Municipality, Western Cape Province, measuring 138.4433 hectares in extent;
and comprises a deciduous fruit farm consisting of approximately 202 planted hectares situated in the
Theewaterskloof Municipality, Caledon Division, Western Cape Province and the rental enterprise
conducted by the Company thereon; and
3.6 the Business, which includes, inter alia, the Business assets, being all the assets owned by
the Seller and used in or in connection with the Business, including the current biological asset,
the High Noon Business names, the contracts, movable assets, intellectual property and the
stock of the Business, but excludes accounts receivable, cash on hand, and the liabilities of
the Business.
4. TERMS OF THE DISPOSAL
The Purchaser will acquire the Property and the Business from the Seller on the terms and conditions
set out below.
4.1 Effective date of the Disposal
The effective date of the Business disposal will be 2 November 2020 (“Closing Date”), or such later
date as the parties may determine and the effective date of the Property disposal will be the date of
registration of transfer of the Property. In terms of the Disposal between Closing Date and transfer
date Opco will pay a market related occupational rental to the Company.
4.2 Conditions precedent
The Disposal is subject to the fulfilment, by or before the Closing Date, of inter alia, the following
outstanding conditions precedent:
1. that the Purchaser shall obtain mortgage loans in an aggregate amount of not less than R
83.5 million over the Property;
2. that the holders of the existing mortgage bond over the Property shall consent to cancellation
of the existing mortgage bond; and
3. that the Seller delivers to the Purchaser a written letter signed by the Seller and the Two-A-
Day Group Proprietary Limited (“TAD”) confirming that the TAD Lease, in terms of which the
Seller agreed to lease a cold storage facility of 8,258 bins of controlled atmosphere to TAD,
has been terminated in writing with effect from 30 November 2020, and that TAD will vacate
the Cold Store and handover the vacant Cold Store to the Purchaser on Monday 30 November
2020.
4.2 The Consideration
The aggregate purchase price for the Property is approximately R95 million subject to a
physical stock take on the Effective Date, and will be settled by the Purchaser as follows:
Property and plant R 83.5 Million
Inventory and movable assets R 11.5 Million (approximately)
The settlement of the purchase price of the Property will take place on registration of transfer
at the Deeds Office, which is expected to be at the end of January 2021. The settlement of
the purchase price of the Business will take place on the Closing Date, upon completion of the
physical stock take.
The consideration will be applied by the Company to reduce financial gearing in the Company
and to assist in funding further diversification projects.
4.5 Profit / Losses and net asset value attributable to the Property
The after tax loss of the Property to the Seller, for the year ended 31 March 2020, was R9.6
million while the net asset value at 31 March 2020 was R 129 million.
These figures have been extracted from the Company’s latest annual financial statements and
have been prepared in accordance with International Financial Reporting Standards.
4.6 Warranties and indemnities
The Purchaser and the Seller have given each other such warranties and indemnities as are
usual in transactions of this nature. Save for these warranties the Property and Business are
sold on a “voetstoots” basis.
5. CATEGORISATION OF THE DISPOSAL
The Disposal is classified as a category 2 transaction in terms of the Listings Requirements of the
JSE.
Mt Edgecombe
2020
Sponsor
Sasfin Capital (a member of the Sasfin Group)
Date: 26-10-2020 04:12:00
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