| Wed 23 Jul 2003, 17:23 | | Detailed cautionary announcement |
|
Ellerine Holdings Limited -
Ellerine Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1968/013402/06)
Share code: ELH ISIN: ZAE000022752
("Ellerines")
Detailed cautionary announcement
1. Introduction
The board of directors of Ellerines has formally advised the board of directors
of Wetherlys ("the Wetherlys board") that, subject to a due diligence review and
funding confirmation, it intends to make an offer to the shareholders of
Wetherlys to acquire the entire issued share capital of Wetherlys ("the
transaction"). The transaction is subject to the fulfilment of the conditions
as set out in paragraph 5 below.
2. Terms of the transaction
It is proposed that the transaction will be implemented by way of a scheme of
arrangement ("the scheme") in terms of section 311 of the Companies Act (No. 61
of 1973), as amended ("the Act"), to be proposed by Ellerines between Wetherlys
and all of its shareholders ("the scheme members").
The implementation of the transaction will result in Wetherly"s shareholders
receiving 390 cents ("the consideration") in cash for each ordinary share held
in the share capital of Wetherlys, amounting to a total consideration of
approximately R507 million.
Should the scheme be implemented, Wetherlys will become a wholly owned
subsidiary of Ellerines, and the JSE Securities Exchange South Africa ("the
JSE") will, upon application, terminate the listing of Wetherlys.
3. Rationale for the transaction
Wetherlys is a niche furniture retailer narrowly focused on the top end of the
South African furniture market. A cornerstone of the company"s success has been
this focus, together with its positioning as a cash retailer and its commitment
to consistent quality and service enhancements. Wetherlys has successfully used
in-house manufacturing and sole supply agreements with furniture manufacturers
to ensure the exclusivity of its product offering. Strategic acquisitions such
as Osiers have enabled it to expand its traditional market segmentation, and
this is expected to provide substantial future growth opportunities. In
addition, the company has successfully started to expand its well-tested formula
into international markets from which further growth opportunities are
anticipated.
It is felt that these opportunities can be pursued more effectively with the
backing of Ellerines" considerable resource base, as opposed to a small cap
company with limited share liquidity.
Ellerines is a significant player in the lower end of the South African
furniture market. The bulk of Ellerines" business is credit based and the
company has distinguished itself in the market through the prudent management of
its debtors book and capital structure over a sustained period. For some time
Ellerines has indicated its intention to diversify into the middle and upper end
of the market, and to use its strong balance sheet to pursue quality acquisition
opportunities. This acquisition will assist Ellerines to meet these objectives.
Furthermore, opportunities for expansion into new sectors in the local market
can be fully exploited by utilising the strengths and expertise of the
respective management teams coupled with the enlarged size and strength of the
combined businesses.
4. Process and recommendations
As indicated in the Wetherlys announcement published today, Wetherlys"
management supports the transaction, subject to a positive recommendation by the
Wetherlys board. The Wetherlys board is undertaking the necessary steps to
enable it to make a recommendation to the shareholders of Wetherlys, in the
manner contemplated in the Code of the Securities Regulation Panel ("the SRP").
5. Conditions precedent to the transaction
The implementation of the transaction is conditional upon the fulfilment of,
inter alia, the following conditions precedent:
- the satisfactory completion of a due diligence review of Wetherlys by
Ellerines by no later than Tuesday, 5 August 2003;
- the entering into by no later than Tuesday, 5 August 2003 of service
agreements between Ellerines and certain key members of management of Wetherlys,
which agreements will be subject to the successful implementation of the
transaction;
- the Wetherlys board, subject to the receipt of a fair and reasonable
opinion, recommending the transaction to the shareholders of Wetherlys;
- Ellerines procuring confirmation, in a format which is acceptable to the
SRP, that it has the funding in place to meet its obligations under the
transaction, by no later than Wednesday, 6 August 2003;
- to the extent necessary, the approval of the transaction by the
shareholders of Ellerines in general meeting;
- the obtaining of the approvals for the transaction of all regulatory
authorities if and to the extent necessary, including those of the South African
Reserve Bank, the SRP, the JSE and the competition authorities;
- the sanctioning of the scheme by a majority representing not less than
75% of the votes exercisable by scheme members present and voting either in
person or by proxy at a meeting of scheme members;
- the High Court of South Africa sanctioning the scheme in terms of the
Act; and
- a certified copy of the Order of Court sanctioning the scheme being
registered by the Registrar of Companies in terms of the Act.
Cautionary announcement
Shareholders of Ellerines are advised to exercise caution when dealing in their
securities until a further announcement is made on or about Wednesday, 6 August
2003.
Johannesburg
23 July 2003
Investment Bank and Sponsor to Ellerines Legal advisers to Ellerines
Nedbank Corporate, Cliffe Dekker Inc
a division of Nedbank Limited
Date: 23/07/2003 05:08:54 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
