| Mon 21 Oct 2002, 17:15 | | Dorbyl - Disposal Announcement |
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Dorbyl - Disposal Announcement
Dorbyl Limited
(Incorporated in the Republic of SA)
(Registration Number 1911/001510/06)
(Share Code: DLV ISIN: ZAE 000002184)
("Dorbyl")
disposal by dorbyl of its engineering products and services division ("dorbyl
engineering")
1. the disposal
1.1 Further to the cautionary announcement published in the press on
7 August 2002 and 17 September 2002, Dorbyl shareholders are advised that Dorbyl
has accepted an offer by Clidet No. 409 (Proprietary) Limited ("the purchaser"),
a special purpose vehicle principally funded by Absa Bank Limited ("Absa"), and
owned by certain senior management of Dorbyl Engineering, Absa and an
empowerment consortium of Mvelaphanda Strategic Investments (Proprietary)
Limited and including Lembede Investments (Proprietary) Limited and Eyethu
Holdings (Proprietary) Limited, for the disposal by Dorbyl of its entire
interest in Dorbyl Engineering as a going concern to the purchaser ("the
disposal"). Dorbyl Marine (Proprietary) Limited and Dorbyl Heavy Engineering
(Proprietary) Limited, which form part of the disposal, will be sold with effect
from 30 September 2002 whilst the remaining businesses of Dorbyl Engineering
will be disposed of with effect from 1 August 2002 ("the effective dates").
1.2 The disposal and the implementation thereof is subject to the fulfilment
of certain conditions precedent as described in 5 below.
2. rationale for the disposal
Dorbyl Engineering has historically been a core activity of the Dorbyl Group and
has been regarded as such until recently. However circumstances surrounding the
different activities within Dorbyl Engineering, and the dynamics of the markets
it serves, have undergone significant change in recent years. Despite its
successful financial performance to date, Dorbyl has concluded that this
operation would be far better equipped to serve its markets and their
requirements as a stand-alone entity, structured with an appropriate black
empowerment shareholding. Dorbyl, with its current shareholding composition is
not easily able to provide the requisite empowerment involvement at Group level
without material current shareholder dilution in one form or another, which at
this time would not be to shareholders` benefit.
Accordingly, it has been decided that it is in Dorbyl`s best interests to
dispose of Dorbyl Engineering. A cash offer has been negotiated which is
acceptable to Dorbyl.
The purchase consideration for the Dorbyl Engineering division will not in the
short term compensate Dorbyl for its loss of the current level of earnings, but
this must be assessed against the abovementioned factors.
The Dorbyl Group has previously stated that it has commenced a programme of
reducing the broad variety of different businesses it was involved in and
focusing on its core activities. In so doing, it expected to release cash and
be in a position to distribute additional dividends to its shareholders, thereby
enhancing shareholder value beyond the level of an undervalued share price.
This disposal of the Dorbyl Engineering business is consistent with that
strategy in that substantial cash is released from a business in which growth
cannot be assured due to the changing circumstances described above. A second
special dividend to shareholders as a result of this transaction should generate
further shareholder value.
Dorbyl`s major focus is now on its two remaining major operating divisions,
Dorbyl Automotive Technologies and its roofing businesses, Alpine in the USA and
Global Roofing Solutions locally. Certain other minor operations remain
currently, but negotiations are ongoing to dispose of these on an acceptable
basis.
Given reasonable economic and market circumstances both locally and in the USA,
and with further investment and a much narrower span of management
concentration, Dorbyl expects to optimize performance in these two remaining
core businesses.
3. consideration
3.1. The disposal consideration for Dorbyl Engineering amounts to R271,3 million
("the disposal consideration").
3.2. The disposal consideration will be settled in cash as follows:
3.2.1. R208 million within 10 business days after the fulfilment of all
conditions precedent ("the closing date");
3.2.2. R8,3 million within 30 business days of the closing date; and
3.2.3. the balance of R55 million upon the earlier of finance for the
property holdings forming part of Dorbyl Engineering being finalised or 31 March
2004.
3.3. That part of the disposal consideration reflected in 3.2.1 will bear
interest at the average call rate ruling between the effective dates and the
closing date, such interest being payable on the closing date.
4. financial effects
4.1. The table below sets out the unaudited pro forma financial effects of
the disposal on the earnings and headline earnings and the net asset value and
net tangible asset value per Dorbyl share, based on the assumptions that:
4.1.1. for purposes of the earnings and headline earnings per share
calculations:
the disposal was effective during the financial year ended 31 March 2002; and
the whole of the disposal consideration was received on 1 April 2001 and that
such consideration was invested to earn an after tax return of 6,9% during the
financial year ended 31 March 2002;
4.1.2. for purposes of the net asset value and net tangible asset value per
share calculations, the disposal was effected on 31 March 2002:
Audited(1) Pro forma
Before
(cents)
After % change
(cents)
Earnings per 258.9 205,3 (20,7)
share(2)
Headline 334.2 274,7 (17,8)
earnings per
share(2)
Net asset value 2 519.6 2 900,3 15,1
per share at
31 March(3)
Tangible net 2 396.6 2 777,2 15,9
asset value per
share at
31 March(3)
Notes
(1) Extracted from the audited consolidated financial statements of Dorbyl
for the year ended 31 March 2002.
(2) Based on a weighted average of 33,664 million shares in issue during
the financial year ended 31 March 2002.
(3) Based on 32,998 million shares in issue at 31 March 2002.
4.2. The financial effects contained in the table in 4.1 above have been
prepared for the purposes of illustrating how the disposal would have affected
the relevant financial ratios of Dorbyl for the historic financial period
indicated and are pro forma only. Accordingly, such effects do not necessarily
represent a true reflection of the financial effects of the disposal on Dorbyl`s
current and future earnings and net asset value.
5. conditions precedent
The disposal is subject to, inter alia, the following conditions precedent:
- Dorbyl shareholders in general meeting passing the requisite resolutions
approving the disposal;
- the Competition Authorities approving the disposal; and
- the JSE Securities Exchange South Africa ("the JSE") approving the circular
to Dorbyl shareholders contemplated in 7 below.
6. related party transaction and independent opinion
6.1. Dr MJ Gouws, a director of Dorbyl, is a member of the management
consortium that controls the purchaser. Also included in the management
consortium controlling the purchaser are various directors of one or more of the
companies which form part of Dorbyl Engineering. These directors and Dr MJ
Gouws are related parties to Dorbyl and the disposal constitutes a "related
party transaction" in terms of the Listings Requirements of the JSE, giving rise
to the requirement that an independent opinion be obtained as to whether the
terms and conditions of the disposal are fair and reasonable to Dorbyl
shareholders.
6.2. PSG Capital Limited has been appointed to provide such opinion, which
opinion will be contained in the circular to Dorbyl shareholders referred to
below.
7. circular to shareholders
A circular to shareholders containing details of the disposal and incorporating
a notice of general meeting of shareholders will, subject to approval by the
JSE, be mailed to shareholders within 28 days of this announcement or within
such longer period as the JSE may allow in the circumstances.
8. withdrawal of cautionary announcement
Shareholders of Dorbyl are advised that caution is no longer required when
dealing in Dorbyl shares on the JSE.
Johannesburg
22 October 2002
Investment bank and sponsor
PSG INVESTMENT BANK
Attorneys
TW FERGUSON ATTORNEYS
Funder to the purchaser
ABSA CORPORATE & MERCHANT BANK
Date: 21/10/2002 05:06:00 PM Produced by the JSE SENS Department
