| Tue 4 Nov 2003, 8:37 | | AFGRI LIMITED AND NATAL AGRICULTURAL CO-OPERATIVE |
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AFGRI LIMITED AND NATAL AGRICULTURAL CO-OPERATIVE LIMITED - JOINT ANNOUNCEMENT
AFGRI LIMITED
(Registration number 1995/004030/06)
ISIN: ZAE000040549
JSE Code: AFR
("Afgri")
NATAL AGRICULTURAL CO-OPERATIVE LIMITED
Trading As Natalagri
("Natalagri")
PROPOSED ACQUISITION OF THE TOTAL MEMBERS" INTEREST IN AND THE ASSETS AND
LIABILITIES OF NATALAGRI AS A GOING CONCERN BY AFGRI
Introduction
Quaestor Capital (Pty) Ltd is authorised to announce that the board of directors
of Natalagri ("the Board") has entered into an agreement with Afgri Operations
Limited ("Afgri Operations"), a wholly owned subsidiary of Afgri, in terms of
which Afgri will, subject to the fulfilment of certain suspensive conditions
("the conditions precedent"), acquire the entire members" interests (including
share capital and members" funds) in and the assets and liabilities of Natalagri
("the Transaction").
Rationale For The Transaction
The Board, after commissioning an in-depth analysis of the business, operations
and future prospects of Natalagri, indicated to the members of Natalagri ("the
Members") at the annual general meeting of Members held on 25 September 2003
that the business of Natalagri required a significant capital injection in order
to maintain and improve service levels to Members.
Pursuant to the Board"s strategic evaluation and its decision to align Natalagri
with a key role player in the agricultural sector, the Board invited certain key
role players to submit proposals to the Board for consideration. The Board
commissioned an independent evaluation of three proposals received by it and,
upon careful consideration of the financial and other implications to Members,
decided to conclude the Transaction with Afgri Operations.
Terms And Conditions Of The Transaction
The salient terms and conditions of the transaction are set out below:
* the effective date of the Transaction is 1 March 2004 ("the effective
date");
* Afgri Operations will acquire, with effect from the effective date, the
entire interests of Members in Natalagri for a total purchase consideration
of approximately R30 million ("the purchase consideration"), payable in
full to Members within 7 days of the date upon which all the conditions
precedent have been fulfilled;
* Afgri Operations will effectively acquire, with effect from the effective
date, all the assets and liabilities of Natalagri as a going concern and
Natalagri will be constituted as a wholly owned subsidiary of Afgri
Operations;
* Members will individually be granted the option to receive their individual
allotments of the purchase consideration in cash, alternatively Members may
either invest their allotments (or part thereof) in the Afgri Cash Deposit
Scheme or acquire shares in Afgri (listed on the JSE Securities Exchange
South Africa);
* Afgri Operations has committed to invest in the existing infrastructure of
Natalagri to ensure continuation and improved service levels to Members and
customers;
* Afgri Operations has undertaken not to adjust the current credit lending
terms and conditions provided by Natalagri to Members, except after
consultation with the Advisory Forum;
* Afgri Operations has undertaken not to adjust the handling costs of
Natalagri"s silos for a period of at least 12 months after the effective
date and not to increase such handling fees in excess of the market related
SAFEX price;
* Afgri will retain the trading name of Natalagri and it will continue to do
business with Members under this name;
* a Regional Advisory Forum will be established by Afgri, the composition and
purpose of which is more fully described below.
The Transaction is subject to, inter alia, the following suspensive conditions,
namely:
* the parties obtaining the applicable statutory and regulatory approvals
necessary to implement the Transaction, including the approval of the
competition authorities; and
* the completion of a satisfactory due diligence by Afgri on the business of
Natalagri.
Financial Effects Of The Transaction On Afgri
The financial effects of the Transaction on Afgri and Afgri shareholders are
immaterial.
Regional Advisory Forum
Afgri has undertaken to establish a Regional Advisory Forum ("the Forum"), which
Forum will comprise the following persons:
* five leading farmers from the Natalagri region, from which the chairman of
the Forum will be elected;
* the managing director of Afgri;
* the chief executive officers of Afgri"s Requisites and Capital divisions,
respectively; and
* the general manager of Natalagri.
The Forum will be responsible for, inter alia, ensuring that a proper
communication channel between the Natalagri farmers (currently the Members) and
Afgri exists regarding all matters of significance to the Members, and in
particular to ensure that farmers are provide a world class service and products
by Afgri. Furthermore, the Forum will be consulted on all material developments
impacting on Members/clients of Natalagri.
Information Sessions
The Board will hold information sessions with Members that will allow Members to
obtain a thorough understanding of the rationale for the Transaction and the
implications thereof to Members and the future business of Natalagri.
The following dates and times have been set aside to conduct the information
sessions:
Place Area/wards Date (2003) Time
Bergville Bergville/Winterton/Ladysmith 10 November 10h00
Dundee Dundee/Wasbank/Helpmekaar/Dannhauser 10 November 15h30
Newcastle Newcastle/Utrecht/Normandien 11 November 10h00
Vryheid Vryheid/Paulpietersburg/Melmoth 11 November 15h30
Pongola Pongola/Hluhluwe 12 November 08h30
Greytown Greytown/Weenen 12 November 16h00
Pietermaritzburg Pietermaritzburg/Howick/Mooi 14 November 09h00
River/Boston
Ixopo Ixopo 14 November 16h00
Kokstad Kokstad 18 November 09h00
Underberg Underberg 18 November 15h30
Bethlehem Bethlehem/Senekal/Clocolan 19 November 10h00
Kroonstad Kroonstad/Heilbron/Wesselsbron/Lichte 19 November 16h00
nburg
Ermelo Ermelo 20 November 12h00
Alexandria Alexandria 21 November 12h00
Members are requested to contact their local Natalagri branch for details
regarding the different venues, alternatively members should contact Natalagri"s
head office (contact person: Mrs Lynn Breedt on (034) 212 5171).
Any possible changes to the above dates and times will be communicated to
Members.
Future Of Natalagri And Recommendation By The Board
The Board is convinced that the Transaction provides an excellent outcome for
Members, inter alia, as a result of the following key considerations:
* Members will receive an immediate and significant cash benefit in terms of
their current exposure to Natalagri, which removes all risk from their
exposure;
* Members are being paid a premium on their current funds invested in
Natalagri;
* Members are free to invest their cash allotments in the manner in which
they determine appropriate, including the option to invest in shares in
Afgri, which is a listed entity on the JSE Securities Exchange South
Africa, alternatively Members may invest their cash allotments in Afgri"s
Cash Deposit Scheme;
* Natalagri service levels will improve as a result of Afgri"s commitment to
invest in Natalagri"s current infrastructure and to continue with the
development of Natalagri"s staff.
The Board unanimously recommends that Members approve the terms and conditions
of the Transaction.
Circular To Members
A circular, providing full details of the terms and conditions of the
Transaction, including a notice convening a special general meeting of Members,
will be posted to Members upon completion of the due diligence review.
Dundee Johannesburg
4 November 2003 4 November 2003
Sponsor:
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
CORPORATE FINANCE
Independent advisor to Natalagri:
Quaestor Capital (Pty) Ltd
