| Fri 13 Dec 2002, 17:52 | | Zarara - Announcement |
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Zarara - Announcement
ZARARA ENERGY LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1895/001078/06)
Share code: ZRR ISIN: ZAE000033080
("Zarara" or "the Company")
PROPOSED SALE OF SA BIOPRODUCTS HOLDINGS (PROPRIETARY) LIMITED ("SA
BIOPRODUCTS") AND PROPOSED SHARE REPURCHASE
1. Introduction
Further to the cautionary announcement of 19 November 2002,
PricewaterhouseCoopers Corporate Finance (Pty) Ltd is authorised to announce
that:
* subject to the conditions precedent referred to in paragraph 2.2 below,
agreement has been reached between Zarara and St James Development Company
(Proprietary) Limited ("St James") in terms of which Zarara will sell its
interests in SA Bioproducts consisting of a 60,14% shareholding in that company
as well as a loan to and claims against SA Bioproducts to St James in
consideration for a cash payment of R27 000 000 ("the proposed sale");
* agreement has been reached between Zarara and certain shareholders of Zarara,
whereby, subject to the required approval of shareholders of Zarara in general
meeting, a total of 7 348 006 shares in the issued share capital of Zarara will
be repurchased and cancelled in accordance with the provisions of section 85 of
the Companies Act, 1973 (Act 61 of 1973), as amended ("the proposed share
repurchase").
2. The proposed sale
2.1 Background to the proposed sale
Zarara acquired, with effect from 1 January 2002, through SA Bioproducts,
71,5% of the lysine manufacturing business of the partnership between AECI
Limited and the Industrial Development Corporation of South Africa Limited.
Zarara`s interest in SA Bioproducts comprises its 60,14% shareholding as well as
a loan of R23 455 244 and claims totalling R1 884 649. St James will acquire the
shares in SA Bioproducts, the loan and claims for a cash consideration of R27
000 000.
Due to a change in focus of the Company, the directors of the Company
believe that it is in the best interests of Zarara shareholders for the Company
to realise, to best advantage, its interests in SA Bioproducts. Over time, the
remaining assets of the Company will be realised with a view to ultimately
winding-up and liquidating the Company. Payments to shareholders, as
appropriate, will be made as and when the situation warrants such payments.
2.2 Conditions precedent to the proposed sale
The proposed sale is subject, inter alia, to the following conditions
precedent, namely:
* the completion by St James on or before 30 January 2003 of a due
diligence investigation into the affairs of SA Bioproducts in order to enable St
James to satisfy itself that written consents to the transfer of certain
material contracts will be obtained and in order to enable St James to confirm
that there are no facts or information which differ materially from those
furnished to St James at the time of signature of the agreement relating to the
proposed sale ("the sale agreement"), to the extent that the nature, or
financial position, or structure, or projections as to the future profitability
and/or viability of SA Bioproducts is fundamentally different from that conveyed
to St James prior to signature of the sale agreement;
* the approval by shareholders of Zarara in general meeting of an
ordinary resolution ratifying and approving the sale agreement;
* the approval of the proposed sale by the Competition Commission, in
terms of the Competition Act No.89 of 1998;
* any other statutory and regulatory approvals that may be required,
being obtained; and
* the provision to Zarara, by not later than 7 (seven) days after
signature of the sale agreement, of a written bank guarantee pursuant to which
the obligation of St James to pay the purchase consideration, together with
interest thereon, is guaranteed.
The circular to shareholders of Zarara referred to in paragraph 6 below
will contain a report with regard to progress made towards fulfilling the
conditions precedent.
2.3 Pro forma financial effects of the proposed sale
Set out below are the unaudited pro forma financial effects on Zarara of the
proposed sale, based on the published unaudited interim financial results of
Zarara for the six months ended 31 March 2002.
Before the After the
Proposed proposed
sale sale Change
(cents)1 (cents) %
Loss per share (54,9) (58,7)2 (6,9)
Headline loss per share (54,9) (58,7)2 (6,9)
Net asset value per share 382,2 382,7 3 0,2
Notes:
1. Extracted from the published unaudited interim financial results of Zarara
for the six months ended 31 March 2002.
2. Adjusted to reflect the earnings and headline earnings per share that the
Company would have earned had the proposed sale been effected by the Company
with effect from 1 January 2002 (being the date on which Zarara originally
acquired SA Bioproducts) and the proceeds arising from the proposed sale had
been invested to earn an after tax interest income of 6,3% for the three months
to 31 March 2002.
3. Adjusted to reflect the effect on the net asset value had the proposed sale
been effected by the Company on 31 March 2002.
3. The proposed share repurchase
3.1 Terms of the proposed share repurchase
The 7 348 006 ordinary shares in Zarara, the subject of the proposed
share repurchase, will be repurchased as follows:
* 76 260 shares at 170 cents per share, from the Zarara Employee Share
Trust;
* 560 000 shares at 134 cents per share, from the Mawenzi Share Scheme;
and
* 711 746 shares at 144 cents per share, from Merlane Limited.
As agreed with the parties to the proposed share repurchase, the proposed
share repurchase will not involve the payment of any cash resources from the
Company. The amount payable by the Company pursuant to the proposed share
repurchase will be settled in full by setting off that amount against non-
interest bearing loans owing to Zarara, respectively, by the Zarara Employee
Share Trust, the Mawenzi Share Scheme and Merlane Limited on the basis that upon
such set off none of the entities concerned will have any further indebtedness
to Zarara.
The shares subject to the proposed share repurchase constitute 26,8% of
the Company`s total issued share capital.
3.2 Conditions precedent to the proposed share repurchase
The proposed share repurchase is subject to the following conditions
precedent, namely:
* the passing at the general meeting of the Company, referred to in
paragraph 6 below, of the special resolutions necessary to permit the Company to
implement the proposed share repurchase; and
* the registration of the special resolutions by the Registrar of
Companies.
3.3 Pro forma financial effects of the proposed share repurchase
The table below sets out the financial effects of the proposed share
repurchase on the earnings and net asset value of the Company based on the
published unaudited interim financial results of Zarara for the six months ended
31 March 2002, assuming that the proposed share repurchase had been effected on
1 October 2001.
Before After
proposed proposed
share share
repurchase repurchase Change
(cents) (cents) %
Loss per share (54,9) (74,8) (36,3)
Headline loss per share (54,9) (74,8) (36,3)
Net asset value per share 382,2 471,0 23,2
Note:
1. The number of shares used to determine the figures in the "Before proposed
share repurchase" and "After proposed share repurchase" is 27 430 900 shares and
20 082 894 shares respectively.
4. Combined pro forma financial effects of the proposed sale and the proposed
share repurchase
Set out below are the combined unaudited pro forma financial effects of the
proposed sale and the proposed share repurchase ("the transactions") on Zarara,
based on the published unaudited interim financial results of Zarara for the six
months ended 31 March 2002.
Before the After the
transactions transactions Change
(cents)1 (cents) %
Loss per share (54,9) (80,0)2 (45,7)
Headline loss per share (54,9) (80,0)2 (45,7)
Net asset value per share 382,2 471,8 3 23,4
Notes:
1. Extracted from the published unaudited interim financial results of Zarara
for the six months ended 31 March 2002.
2. Adjusted to reflect the earnings and headline earnings per share that the
Company would have earned had the proposed sale been effected by the Company
with effect from 1 January 2002 and the proceeds arising from the proposed sale
had been invested to earn an after tax interest income of 6,3% for the three
months ended 31 March 2002.
3. Adjusted to reflect the effect on the net asset value had the transactions
been effected by the Company with effect from 31 March 2002.
5. Opinions and recommendations
PricewaterhouseCoopers Corporate Finance (Pty) Ltd, has been appointed as
independent financial adviser to the board of directors of Zarara to consider
the terms and conditions of the proposed sale.
As Merlane Limited and the Mawenzi Share Scheme, due to their material
shareholding, are related parties to Zarara, the directors have appointed
PricewaterhouseCoopers Corporate Finance (Pty) Ltd, to give a fair and
reasonable opinion in order to assist the directors in formulating their opinion
as to whether or not the terms of the proposed share repurchase are fair and
reasonable to shareholders.
The opinions of PricewaterhouseCoopers Corporate Finance (Pty) Ltd regarding
the proposed sale and the proposed share repurchase will be included in the
circular to shareholders of Zarara referred to in paragraph 6 below.
6. Circular to shareholders and general meeting
A circular, which is subject to the prior approval of the JSE Securities
Exchange South Africa ("JSE") and the Securities Regulation Panel, containing
full details of the proposed sale and the proposed share repurchase and
including a notice convening a general meeting of the Company ("general meeting
circular") is in the process of being prepared and will be posted to
shareholders of Zarara on or about Tuesday, 14 January 2003.
7. Salient dates relating to the proposed sale and the proposed share repurchase
2003
General meeting circular posted to Zarara
shareholders on or about Tuesday, 14 January
Last date to lodge forms of proxy for the
general meeting of Zarara shareholders by
not later than 10:00 on Monday, 3 February
General meeting of Zarara shareholders to
be held at 10:00 on Wednesday, 5 February
Results of general meeting published on Thursday, 6 February
Termination of listing of the shares comprising
the proposed share repurchase from
commencement of trading on the JSE on Friday, 7 February
Note:
The above dates and times are subject to amendment. Any such amendment will be
published on SENS and in the press.
Johannesburg
13 December 2002
Independent adviser and sponsor
PricewaterhouseCoopers
Corporate Finance (Pty) Ltd
(Registration number 1970/003711/07)
Attorneys
Cliffe Dekker
Reporting accountants
Deloitte & Touche Chartered Accountants (SA)
Registered accountants and auditors
Date: 13/12/2002 05:30:07 PM Produced by the JSE SENS Department
