| Mon 5 Jan 2004, 12:15 | | NEW CLICKS HOLDINGS LIMITED - Disposal of New Clic |
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NEW CLICKS HOLDINGS LIMITED - Disposal of New Clicks Australia (Proprietary)
Limited
NEW CLICKS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1996/000645/06)
Share code: NCL
ISIN: ZAE000014585
Disposal of New Clicks Australia (Proprietary) Limited
Introduction
Further to the cautionary announcement dated 9 December 2003, Investec Bank
Limited is authorised to announce that New Clicks Holdings Limited and its
wholly owned subsidiary New Clicks International Holdings NV ("New Clicks"),
have entered into an agreement, subject to the conditions precedent set out in
paragraph 3.3 below (the "conditions precedent"), to dispose of New Clicks"
interest in New Clicks Australia (Proprietary) Limited ("NCA") to Synapse
Holdings (Proprietary) Limited ("Synapse Holdings"), a company owned by a
consortium of private equity funders (the "consortium") ("the disposal").New
Clicks Australia
Description and background
NCA is a wholly owned subsidiary of New Clicks. NCA operates in the Australian
retail market, trading under the brand names of Priceline, Priceline Pharmacy,
Price Attack and House.
Current status and rationale for the disposal
NCA has grown into a multi branded business represented by over 300 stores.
However, NCA requires a large capital inflow to grow the business, either by
acquisition or through a strategic alliance with a pharmaceutical distributor.
The board has taken a decision that it cannot afford to lose focus and commit
resources to addressing the challenges in the Australian market at the expense
of the local growth strategy.
Terms of the disposal
Subject to the fulfilment of the conditions precedent, New Clicks will dispose
of its shares in and shareholders" claims against NCA to the consortium on the
completion date, which shall be 13 February 2004 ("completion date"). This
completion date may be extended to accommodate the fulfilment of conditions
precedent, but not beyond 8 March 2004 unless otherwise agreed between the
parties.
The consortium
The consortium comprises the following private equity funders:
- ABN Amro Capital (Belgium) NV
- Investec Wentworth Private Equity Nominees Pty Limited
- Castle Harlan Australian Mezzanine Partners (Proprietary) Limited
The Consortium has advised that they propose to enable the senior members of NCA
management to participate in the equity of Synapse Holdings post the completion
date.
The sale proceeds
The sale proceeds are an amount of Australian $ 107 million. Out of these
proceeds:
- New Clicks is obliged to retire certain bank debts and financial lease
liabilities ("external indebtedness") as at 28 December 2003. As at 31 August
2003 the external indebtedness amounted to Australian $ 21.8 million; and
- The Consortium and NCA are obliged to redeem redeemable preference shares held
by New Clicks for a redemption consideration of Australian $ 67.2 million.
New Clicks is therefore expected to receive sale proceeds from the disposal of
approximately Australian $ 85.2 million, including the redemption consideration
in respect of the preference shares, and a preference dividend of Australian $ 1
million, which has been declared and will be paid prior to the completion date,
as well as the benefit of Australian $ 1.9 million, representing a surplus over
the ungeared tangible net assets as at 31 August 2003.
Conditions precedent
The disposal is subject to the fulfilment or waiver, of, inter alia, the
following conditions precedent:
- the approval of the disposal by the Exchange Control Division of the South
African Reserve Bank, to the extent required;
- the approval of the JSE Securities Exchange South Africa and any other
regulatory approvals that may be required;
- the approval under the Australian code on take-overs and mergers, the Foreign
Acquisition and Takeovers Act 1975, to the extent required;
- the approval of the Dutch central bank to the extent required;
- the credit approval of the funding terms of the sale proceeds, between the
consortium and its debt financiers by 31 December 2003; and
- the consortium furnishing New Clicks with formal signed debt funding
agreements between the debt financiers and the consortium.
Warranties
New Clicks has given normal warranties, representations, undertakings (including
certain non compete undertakings) and guarantees to the consortium in relation
to the disposal.
Warranty claims in respect of warranties of title and transfer are limited to
Australian $ 107 million. All other warranty claims are limited to Australian $
25 million, reducing to Australian $ 12.5 million for the last 2 (two) years of
a 4 (four) year warranty regime.
In the event of any pre completion date adjustments or warranty claims of an
amount greater than Australian $5 million, either party may terminate the
agreement for the disposal.
Board restructure
Jeff Sher, the Australian executive director, will resign from the Board of New
Clicks with effect from completion.
Financial effects and application of the sale proceeds
The table below sets out the illustrative pro forma financial effects of the
disposal, assuming it had been effected for income statement purposes on 1
September 2002 and for balance sheet purposes on 31 August 2003.
Before After % change
(1)
Earnings per share
("EPS")(cents) (2) 63.5 67.4 6.1
Headline earnings per
share ("HEPS") (cents) 65.6 65.6 -
(3)
Net asset value
("NAV") per share 454 459 1.1
(cents) (4)
Net tangible asset
value ("NTAV")
per share (cents) (4) 388 428 10.3
Notes:
The "Before" column has been extracted without adjustment from New Clicks"
audited annual financial statements for the year ended 31 August 2003.
The "After" column reflects the EPS for the year ended 31 August 2003, decreased
to take account of the loss of earnings arising from the disposal and increased
by the after-tax capital profit made by New Clicks on the disposal, calculated
using an average R/AU $ exchange rate of 5.11686 for the year, and increased by
the interest accrued at an after-tax interest rate of 9.5% on the sale proceeds.
The "After" column reflects the HEPS for the year ended 31 August 2003,
decreased to take account of the loss of earnings arising from the disposal and
increased by the interest accrued at an after-tax interest rate of 9.5% on the
sale proceeds.
The "After" column reflects the NAV and NTAV per share at 31 August2003,
adjusted for the after tax capital profit realised from the disposal.
Sandton
5 January 2004
