| Fri 28 Nov 2003, 17:52 | | Kairos - Acquisition of the business of T Torre B |
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Kairos - Acquisition of the business of T Torre Brickworks (Pty) Limited as a
going concern
Kairos Industrial Holdings Limited(Incorporated in the Republic of South
Africa)(Registration number 1987/002927/06)(Kairos or the company)Share code:
KIRISIN: ZAE000011284
ACQUISITION OF THE BUSINESS OF T TORRE BRICKWORKS (PTY) LIMITED AS A GOING
CONCERN
1. Introduction
Further to the cautionary announcement dated 26 November 2003, shareholders are
advised that the company has entered into an agreement (the acquisition
agreement) with T Torre Brickworks (Pty) Limited (Torre or the seller), for the
purchase of Torres brick-making business (the business) as a going concern,
subject to the fulfillment of the conditions precedent set out in paragraph 2
below (the acquisition).
2. The acquisition
Torre manufactures and supplies bricks to the building and construction
industry. Kairos, through its wholly-owned subsidiary, Witbank Brickworks (1961)
(Pty) Limited (the purchaser), will acquire the business from Torre with effect
from 1 January 2004 (the effective date) for a consideration of R15,7 million
(the acquisition consideration), payable in cash on the following basis:
* a deposit of R2 million was paid on the date of signature of the acquisition
agreement; and
* the balance will be paid on transfer of the property, from which the business
is conducted, into the name of the purchaser.The seller has not guaranteed the
book debts or other assets of the business. Warranties normal for a transaction
of this nature have been provided.Kairos will finance the acquisition
consideration as follows:
* R2 million has been financed from existing cash resources; and
* R13,7 million will be financed using debt facilities to be secured by
Kairos.The acquisition is subject to the fulfilment of the following conditions
precedent:
* the satisfactory completion of a due diligence investigation by Kairos on the
business by no later than 10 December 2003;
* the purchaser concluding, to its satisfaction, contractor agreements and/or
restraint agreements with certain key contractors;
* approval by the Kairos shareholders in a general meeting. Mr WL van Deventer,
Executive Chairman of Kairos, representing Shefa Equity Holdings (Pty) Limited,
Kairos controlling shareholder, has undertaken to vote in favour of the
acquisition;
* approval by the sellers shareholders in terms of section 228 of the Companies
Act;
* the purchaser obtaining the necessary mining authorisations in terms of the
Minerals Act;
* the purchaser obtaining the necessary finance, in the amount of R13,7 million,
to fund a portion of the acquisition consideration, on terms and conditions
reasonably acceptable to the purchaser; and
* any other regulatory approvals, to the extent necessary.
3. Rationale for the acquisition
The recent decline in interest rates and the anticipated further reductions
augur well for the construction industry over the medium-term. The acquisition
furthers Kairos strategy to substantially expand its building materials division
geographically and to add critical mass to its business. It is anticipated that
operational efficiencies will be achieved which will result in improved
profitability for the group.
4. Financial effects of the acquisition
Set out in the table below are the pro forma financial effects of the
acquisition based on Kairos interim results for the six months ended 31 August
2003. The pro forma financial effects have been prepared for illustrative
purposes only to provide information on how the acquisition may have impacted
the results and financial position of Kairos. Because of their nature, the pro
forma financial effects may not give a fair reflection of Kairos financial
position after the acquisition or the effect on future earnings.
Note Before the After the Change
Acquisition acquisition (%)
(cents)1 (cents)
Earnings per 2 0,54 1,04 92,6
share
Headline 2 0,53 1,03 94,3
earnings per
share
Net asset 3 8,83 10,41 17,9
value per
share
Net tangible 3 8,05 9,63 19,6
asset value
per share
Note:
1. Extracted from the unaudited interim results of Kairos for the 6 months
ended 31 August 2003.
2. Earnings and headline earnings per share are based on the following
assumptions:The Before the acquisition column reflects the earnings and headline
earnings per share as published by Kairos in its interim results for the 6
months ended 31 August 2003. The After the acquisition column assumes that the
acquisition was implemented on 1 March 2003 and is based on the number of shares
in issue for the period under review. Interest payable at a market related rate
was provided for on the acquisition consideration.
3. Net asset value and net tangible asset value per share are based on the
following assumptions:
* The Before the acquisition column reflects the net asset value and net
tangible asset value per share as at 31 August 2003 and is based on 252 085 399
issued shares.
* The After the acquisition column assumes that the acquisition was implemented
on 31 August 2003.
4. Documentation
A circular, which is subject to the approval of the JSE Securities Exchange
South Africa, will be sent to shareholders in due course. The circular will
contain details of the acquisition, and will incorporate a notice of a general
meeting to Kairos shareholders.
For and on behalf of the board
L Jonker
Company Secretary
28 November 2003
Corporate advisor and Sponsor
Bridge Capital
Legal Advisors
Corporate Law Services
Reporting accountants and auditors
Burn Reynolds & Company
