| Tue 10 Dec 2002, 17:20 | | Aquila Growth Limited - Disposal of interest in Gl |
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Aquila Growth Limited - Disposal of interest in Global Resorts SA (Pty) Limited
Aquila Growth Limited
Incorporated in the Republic of South Africa
(Registration number 1995/003158/06)
Share code: AQL ISIN: ZAE000013959
("Aquila" or "the company")
Disposal of interest in Global Resorts SA (Pty) Limited
1. Introduction
Further to the cautionary announcement dated 9 December 2002, shareholders
are notified that Aquila has entered into an agreement with, inter alia,
Platinum Mile Investments 398 (Pty) Limited, representing a consortium
backed by the management of Global Resorts SA (Pty) Limited ("GRSA") and
Metallon Corporation Limited ("the purchaser"), relating to:
* the disposal of the company`s 23.43% interest in GRSA ("the disposal")
to the purchaser for a cash consideration of R175 360 477;
* the repayment of a portion of Aquila`s outstanding loan to GRSA, in
the amount of R3 925 000 in cash ("the repayment"); and
* the capitalisation of Aquila`s remaining outstanding loan to GRSA,
after the repayment referred to above, of R66 125 000 by Aquila
subscribing for preference shares in GRSA ("the capitalisation"),
collectively, "the transaction". The transaction is subject to the
fulfilment of the conditions precedent set out in paragraph 5 below.
2. Terms of the disposal and the capitalisation
Aquila will dispose of its interest in GRSA to the purchaser for an amount
of R175 360 477 ("the disposal consideration"), payable in cash on
fulfilment of the conditions precedent. The disposal consideration will be
increased by an amount of approximately R79 214 per day from 1 January 2003
to the effective date, being the date of fulfilment of all the conditions
precedent. Warranties, normal for a disposal of this nature, have been
given by Aquila to the purchaser.
In addition, Aquila has agreed to subscribe for 66 125 000 cumulative
redeemable convertible "A" preference shares ("the "A" preference shares")
in GRSA by the capitalisation of Aquila`s remaining outstanding loan of R66
125 000 to GRSA. The subscription price in respect of the "A" preference
shares will be R1 per "A" preference share. The "A" preference shares bear
a coupon rate of 16.5% nominal annual compounding annually ("naca"),
payable semi-annually in arrears on 30 June and 31 December each year, save
that the first dividend will be paid on 31 December 2003. The coupon rate
will increase by 0.4866 percentage point naca for each year that any "A"
preference shares remain unredeemed. The "A" preference shares are
redeemable over a period of six years. The "A" preference shares are
convertible into ordinary shares in GRSA, at the request of the "A
preference shareholders, at any time that:
- the "A" preference dividend is in arrear;
- any redemption payment is in arrear; or
- any event occurs which renders the "A" preference shares redeemable at the
request of the "A" preference shareholders.
3. Rationale for the transaction
Aquila`s investment philosophy is to acquire significant minority or
controlling shareholdings in predominantly unlisted industrial and
commercial companies operating in high growth markets with experienced
owner management teams in order to generate and ultimately realise strong
capital growth. This reinforces Aquila`s view that investment performance
in private equity and venture capital should be assessed in the medium to
long term over a 5 to 10 year period. The disposal consideration will be
applied in line with Aquila`s investment philosophy.
Aquila`s board of directors supports the disposal of its interest in GRSA
for the following reasons:-
* Aquila invested in GRSA on the strength of the current shareholders in
GRSA, namely RMB Holdings Limited and Genbel Securities Limited, both of
which have accepted the terms of the disposal for their respective
interests in GRSA;
* the purchaser represents an empowerment shareholder with a proven track
record. The disposal will make GRSA the first black controlled gaming
company in South Africa with significant gaming and hotel resort interests;
* the disposal will be in line with the charter of the various gaming and
control boards to ensure significant ownership by black interest groups in
the gaming and hotel resorts industry;
* the disposal supports Aquila`s investment philosophy; and
* the disposal consideration is considered by the Aquila directors to be fair
and reasonable.
4. Financial effects of the transaction
Set out in the table below are the pro forma financial effects of the
transaction based on Aquila`s interim results for the six months ended 31
August 2002. The pro forma financial effects have been prepared for
illustrative purposes only to provide information on how the transaction
may have impacted on the results and financial position of Aquila. Because
of their nature, the pro forma financial effects may not give a fair
reflection of Aquila`s financial position after the transaction or the
effect on future earnings.
GRSA`s net asset value at 31 December 2001 and its net profit after tax
(before exceptional items) for the year ended 31 December 2001, were
R775.9 million and R48.2 million, respectively.
Note Before the After the Percentage
transaction transaction change
(cents) (cents) (%)
Earnings per share 2 4.42 63.13 13.28
Headline earnings per
share 2 (3.02) 3.46
Net asset value per
share 3 212.7 260.4 22
Net tangible
asset value per
share 3 198.5 246.2 24
Note:
(1). Extracted from the unaudited interim results of Aquila for the 6 months
ended 31 August 2002.
(2) Earnings and headline earnings per share are based on the following
assumptions:
*the transaction was effective 1 March 2002;
*the disposal consideration was invested at a pre-tax interest rate of 11%
pa;
*a tax rate of 30%;
*the "A" preference shares earned a preference dividend of 16.5% pa;
*earnings and headline earnings have been adjusted for equity accounted
earnings pertaining to Aquila`s interest in GRSA;
*headline earnings have been adjusted for the profit on the disposal,
calculated at 1 March 2002, of R81.429 million (the actual profit to be
realised by Aquila will be reduced by equity accounted earnings to the
effective date); and
*128 679 116 shares in issue during the period.
(3) Net asset and tangible asset value per share are based on the following
assumptions:
*the transaction was effective 31 August 2002; and
*127 511 594 shares in issue at 31 August 2002.
5. Conditions precedent
The transaction is subject to, inter alia, the fulfilment of the following
conditions precedent:
*a guarantee being supplied by a suitable bank on behalf of the purchaser,
guaranteeing the availability of funds to satisfy the disposal
consideration;
*the written approval of the applicable gaming and control boards;
*the written approval of the Botswana Development Corporation;
*the approval of the relevant Competition authority;
*the approval by the shareholders of Marang (East Rand) Gaming Investments
(Pty) Limited for the disposal of its shares in GRER Holdings (Pty) Limited
to GRSA;
*JSE Securities Exchange South Africa ("JSE"), Securities Regulation Panel
("SRP") and any other regulatory approvals; and
*approval by the Aquila shareholders in general meeting.
6. Independent advice
The disposal qualifies as an "affected transaction" in terms of the rules
of the Securities Regulation Code ("the Code"). The Code requires the
directors of Aquila to obtain independent advice on the fairness and
reasonableness of the disposal, and Bridge Capital has been appointed in
this regard. The content of Bridge Capital`s opinion will be included in
the circular to be mailed to shareholders, as discussed below.
7. Documentation
A circular, which is subject to the approval of the JSE and SRP, will be
sent to shareholders in due course. The circular will contain details of
the transaction and Bridge Capital`s opinion, and will incorporate a notice
of general meeting to Aquila shareholders.
Johannesburg
11 December 2002
Sponsor and independent advisor
Bridge Capital
Reporting accountants
PricewaterhouseCoopers
Legal advisers
Peter Dawe & Associates
Date: 10/12/2002 05:16:00 PM Produced by the JSE SENS Department
