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McCarthy - Acquisition and disposal of certain Daimler Chrysler dealerships
McCarthy Limited
(Formerly McCarthy Retail Limited)
(Registration number 1991/003245/06)
("McCarthy" or "the company")
JSE Code ISIN
Ordinary shares MCC ZAE000034823
Preference shares MCCP ZAE000034831
Debentures MCCD ZAE000034849
Acquisition and disposal of certain Daimler Chrysler dealerships
1. Introduction
Rand Merchant Bank is authorised to announce that McCarthy will dispose of the
McCarthy Truck Centre operations in Gauteng and Cape Town and the McCarthy Cape
and McCarthy Randburg passenger car operations and will simultaneously acquire
Ellenby Motors Hatfield and Mitsubishi Motors Centurion with effect from 1
November 2002 ("the transaction").
The party with whom this transaction is being undertaken is Sandown Motor
Holdings (Proprietary) Limited which is 75% owned by Daimler Chrysler South
Africa (Proprietary) Limited ("DCSA").
2. Rationale for the transaction
DCSA has revised its dealer representation strategy and implemented a new brand
centre concept in South Africa. The new strategy will restructure the dealer
organisation into five brand centre territories in the major metropolitan areas
- three in Gauteng, one in Cape Town and one in Durban. The restructuring of
the Metropolitan dealer network involves changes of ownership, and realigned
franchise territories. McCarthy has been required in terms of the new strategy
to enter into the transaction.
Also as part of DCSA`s new strategy, McCarthy will, as a separate transaction,
be disposing of its McCarthy Pinetown operation in February 2003 to Barloworld
Motor (Proprietary) Limited and Durban South Motors (Proprietary) Limited acting
as nominees for a company to be incorporated.
3. Terms of the transaction
3.1. Consideration
The net consideration for the transaction will be the difference between the
defined net asset value of the businesses disposed of and acquired, as set out
in the sale agreement, less the liabilities relating to the businesses disposed
of which are retained by McCarthy. The consideration, which will be settled in
cash, comprises of the proceeds from the disposal of assets of R108 million less
the cost of assets acquired of R13 million resulting in a net consideration of
R95 million.
3.2. Application of the proceeds
The proceeds from the transaction will be applied to reduce the borrowings of
McCarthy.
3.3 Effective date
The effective date for the transaction is 1 November 2002.
3.4. Nature of the assets forming part of the transaction
The McCarthy operations being sold consist of 7 dealerships and truck operations
representing the Mercedes Benz, Chrysler, Colt and Freightliner brands. The
dealerships sell both new and used vehicles and operate parts and service
functions. The two dealerships to be acquired by McCarthy represent the
Mercedes Benz, Chrysler, Mitsubishi brands and similarly sell both new and used
vehicles and operate parts and service functions.
4. Financial effects of the transaction
The directors of the company recognise that shareholders need to be informed of
the potential impact of the transaction as soon as possible. Accordingly, the
expected impact of the transaction on the earnings per share and net asset value
("NAV") per share attributable to a McCarthy ordinary shareholder for the year
ended 30 June 2002 are set out in the table below.
The financial effects of the transaction are based on the following assumptions:
- the "Before transaction" , "After acquisition" and "After acquisition and
disposal" positions are based on the company`s audited results for the twelve
months ended 30 June 2002 and on the balance sheet as at that date;
- the "After acquisition" and "After acquisition and disposal" positions in
respect of earnings per share assumes that the transaction was effective from 1
July 2001 and that the proceeds were set off against interest bearing debt
bearing interest at a rate of 14.5% per annum; and
- the "After acquisition" and "After acquisition and disposal" position in
respect of NAV assumes that the transaction was effected on 30 June 2002.
Before After After Decreas
transac acquisi acquisi e after
tion tion tion transac
(cents) (cents) and tion
disposa (%)
l
(cents)
Earnings per
McCarthy ordinary
share for the year
ended 30 June 2002
- Undiluted 4.8 5.7 4.2 12.5
- Diluted 3.5 4.1 3.1 11.4
- Headline diluted 5.4 6.0 5.0 7.4
NAV per McCarthy
ordinary share as at
30 June 2002
- Undiluted 23.8 24.7 23.2 2.5
- Diluted 18.4 19.0 18.0 2.2
When the transaction has been implemented, an announcement will be released on
SENS informing shareholders of the financial effects, should they be materially
different from the financial effects shown above
Durban
31 October 2002
Sponsor
RMB Corporate Finance
Date: 31/10/2002 05:56:00 PM Produced by the JSE SENS Department
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