| Mon 26 Apr 2004, 17:41 | | Hosken Consolidated Investments Limited - Acquisit |
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Hosken Consolidated Investments Limited - Acquisition Of All The Shares In And
Claims Against Golden Arrow Bus Services (Pty) Ltd
Hosken Consolidated Investments Limited
(Registration number 1973/07111/06)
(Incorporated in the Republic of South Africa)
ISIN Number: ZAE000003257
JSE Share Code: HCI
("HCI" or the "company")
ACQUISITION OF ALL THE SHARES IN AND CLAIMS AGAINST GOLDEN ARROW BUS SERVICES
(PROPRIETARY) LIMITED ("GABS")
1. Introduction
Pursuant to the cautionary announcement dated 3 March 2004, HCI
shareholders are advised that HCI and its subsidiary, Mettle Limited
("Mettle"), have entered into a sale agreement through a company currently
owned jointly by them, Coco Haven 1 (Proprietary) Limited ("Coco Haven"),
to acquire all the shares in and claims against GABS ("the acquisition").
To comply with black economic empowerment objectives it is anticipated that
Coco Haven will become a wholly owned subsidiary of HCI. The sale agreement
was entered into with Golden Arrow Investment Holdings Limited ("GAIHL")
and The Trustees for the time being of the Golden Arrow Foundation ("the
Foundation"), each holding 50% of GABS.
Upon fulfilment of the conditions precedent referred to in paragraph 5
below, the acquisition will become effective from 28 March 2004.
2. Nature Of Business Of GABS
GABS is the sole provider of scheduled bus transport in the Western Cape
metropole, with services provided from six depots covering approximately
1 350 square kilometres. As a result, the company plays a significant role
in meeting basic needs as well as building the economy of the region.
3. Rationale
The HCI Board considers the acquisition to be an appropriate investment
opportunity.
4. Consideration
The initial consideration payable by HCI and its subsidiary Mettle under
the sale agreement was R270 million in cash, which following negotiation
with the sellers and a due diligence review, has been decreased to R250
million.
5. Conditions Precedent
The acquisition is subject to the fulfilment of, inter alia, the following
conditions precedent:
* obtaining approval from the Competition Authorities, and the requisite
regulatory approvals including, without limitation, that of the
relevant Transport Authorities and the JSE Securities Exchange South
Africa ("JSE"); and
* the shareholders of GAIHL and HCI, in general meeting, approving the
acquisition.
6. Financial Effects
Based on the published consolidated unaudited results of HCI for the 6
months ended 30 September 2003, the pro forma financial effects of the
acquisition on HCI"s earnings, headline earnings and net asset value
("NAV") are set out below. The pro forma financial information has been
prepared for illustrative purposes only and because of its nature may not
give a true picture of HCI"s financial position and results of operations.
Per HCI Before the After the Percentage
ordinary acquisition acquisition Change
share (1) (2)
Earnings 94.55 121.75 (3) 28.8%
(cents)
Headline loss (1.60) 25.64 (3) -
(cents)
NAV (cents) 5.93 6.18 4.2%
Notes:
1. Based on the published consolidated unaudited results of HCI for the 6
months ended 30 September 2003.
2. Based on the assumption that the acquisition, in terms of the sale
agreement, was effected on 1 April 2003 for income statement purposes and
on 30 September 2003 for balance sheet purposes and assuming that HCI and
Mettle pay the purchase consideration of R250 million.
3. Taking into account HCI"s effective 83.3% share of the profits of GABS
after minorities, which were extracted from the reviewed results of GABS
for the six months ended 31 December 2003, a further adjustment was made to
take into account the after tax interest that would have been received on
the purchase consideration at average call rates applicable during the
period 1 April 2003 to 30 September 2003.
4. The financial effects on tangible NAV have not been disclosed as they are
not material.
7. Circular To HCI Shareholders And Withdrawal Of Cautionary Announcement
Subject to approval by the JSE, a circular containing full details of the
acquisition will be posted to HCI shareholders in due course ("the
Circular"). The Circular will also include a notice convening a general
meeting for HCI shareholders to consider and, if deemed appropriate, pass
the resolutions necessary to give effect to the acquisition.
Further to the detailed cautionary announcement dated 3 March 2004,
shareholders are advised that further to the above announcement, caution
need no longer be exercised when dealing in HCI shares.
Durban
26 April 2004
Sponsor:
Nedbank Capital
Reporting Accountants:
Fisher Hoffman PKF (JHB) Inc.
