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VIKING INVESTMENT AND ASSET MANAGEMENT LIMITED
(Registration Number: 1998/004440/06)
Share Code: VKG ISIN: ZAE000015871
("Viking or the Company")
Announcement with regards to the acquisition of assets and liabilities of Metech
International Inc
Introduction
On 2 September 2002, it was announced that negotiations relating to the proposed
acquisition of selected assets and liabilities of Metech International Inc.
("Metech Inc") had been successfully concluded including those relating to the
financing of the transaction.
The purpose of this announcement is to provide further information on the
acquisition to shareholders and to set out the further steps which need to be
taken.
The acquisition
Viking Resource Investments LLC ("Viking US"), a wholly owned subsidiary of
Viking has acquired 51% of the equity of Metech International LLC ("Metech US")
which company has acquired substantially all of the assets and business
(excluding real estate) of Metech International Inc., a wholly owned subsidiary
of Swedish conglomerate Trelleborg AG. The balance of the shares on Metech US
are held by Mapleville Management Group LLC ("Mapleville") (which company is
controlled by the Metech senior management group led by John Koskinas as
President). Metech US will be managed by Mapleville.
Nature of the business
The nature of the business acquired by Metech US is the recycling and reuse of
industrial manufacturing by-products, obsolete inventory, scrap and non-
conforming materials for the extraction of precious metals.
The consideration
The purchase consideration was US$12,615 million which amount was satisfied
through various short-term offshore loans and the sale of certain inventory to a
third party. Additional short-term loans have been arranged to provide for the
working capital needs of the company. It is intended that certain of these loans
will be converted into shares in Viking at an issue price of R2 per share once
the necessary regulatory and shareholder approvals have been obtained.
Rationalisation
This acquisition complements the Viking Platinum acquisition concluded last year
in that both Viking Platinum and Metech US reclaim precious metals from used or
waste products. This acquisition presents a number of potential synergies that
should be realised by having both these companies operating under Viking US and
will be used to establish a solid base for further growth in this market.
Financial effects
As the acquisition comprises only certain assets and liabilities of the seller,
the historical financial information contained in the audited financial
statements of Metech Inc is not relevant in providing comparative financial
information. The audited revenue attributable to the assets acquired is as
follows:
Years ending
31 December 2000$ 000`s 2001$ 000`s 2000R 000`s 2001R 000`s
Revenue 81 951 98 043 567 101 840 738
Note the US dollar amounts have been converted at the average exchange rates for
the periods concerned (2001 R8,575 = $1; 2000 R6,92 = $1)
On the assumption that the transaction had been effective for the financial year
ended 31 December 2001, the transaction would have had the following effect on
the revenue of Viking;
BeforeR 000`s AfterR 000`s Percentage change
Revenue 24 232 864 970 3 469%
Certain of the trading assets were acquired at a discount of $4 million (R42,6
million) which will have a positive effect on Earnings per Share in the current
year of 36,96 cents per share. The discount will not have any effect on
Headline Earnings per Share. In terms of the transaction relating to the
immediate sale of inventory to a third party, a profit of $653 000 (R6 954 450)
was realised which will equate to a contribution to both Headline Earnings and
Earnings in the current year of 6,03 cents per share. The rate of exchange at
the effective date of acquisition was R10,65 = $1.
Whilst the acquisition will have no effect on the Tangible Net Asset Value of
Viking, the Net Asset Value per share will increase by 281% from 22,4 cents per
share to 63,0 cents per share (based on the number of shares in issue at 31
December 2001) or 57,4 cents per share based on the number of shares in issue at
the date of this announcement
Further details of the financial effects of the transaction will be made
available to shareholders shortly.
Required approvals
1 The transaction requires the approvals of the shareholders and, to the
extent required, the exchange control authorities of South Africa.
2 The issue of shares to settle certain of the foreign loans is subject to
the approval of shareholders and the exchange control authorities of South
Africa.
Documentation and notices of general meeting
In terms of the listings requirements of the JSE, Viking is required to issue a
revised prelisting statement as a result of the significant change in the nature
of business of Viking as well as a Circular to shareholders giving details of
the acquisition and containing a notice of a general meeting of the Viking
shareholders in order to obtain the required shareholder approvals. This
documentation will be posted to Viking shareholders shortly.
18 September 2002
Advisors
Corporate Adviser and Sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Ltd
Legal Advisers
Bowman Gilfillan Inc
Date: 18/09/2002 04:19:01 PM Produced by the JSE SENS Department
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