| Wed 23 Jun 2004, 15:42 | | ACQUISITION OF THE BUSINESS OF H.S. NUTS |
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Jse: Exl
Release Date: 23/06/2004 15:20:38 Code(s): EXL EXLD
EXCELLERATE HOLDINGS LIMITED - ACQUISITION OF THE BUSINESS OF H.S. NUTS
(PROPRIETARY) LIMITED AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
EXCELLERATE HOLDINGS LIMITED
(Registration number 1997/009884/06)
(Incorporated in the Republic of South Africa)
Share code: EXL ISIN: ZAE000026092
Share code: EXLD ISIN: ZAE000044145
(`Excellerate`)
ACQUISITION OF THE BUSINESS OF H.S. NUTS (PROPRIETARY) LIMITED AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT
1. Introduction
Shareholders of Excellerate are advised that Excellerate, through its wholly
owned subsidiary Ibiza Trading 2 (Proprietary) Limited (`Ibiza`) or its nominee
has entered into a memorandum of understanding (`MOU`) with H.S. Nuts
(Proprietary) Limited (`H.S. Nuts`) to acquire the business, including specified
sale assets, carried out by H.S. Nuts and its subsidiary companies (`the
acquisition`).
The acquisition will be effective from 1 July 2004.
2. Nature of business of Ibiza and H.S. Nuts
Ibiza conducts the businesses of Alpine Importers and a fellow subsidiary Fruti-
Flow (Proprietary) Limited (`Fruti-Flow`). Alpine Importers, based in Midrand,
processes and distributes food products under the name Alpine. The Fruti-Flow
business is based on the West Rand and is involved in the processing and
distribution of food products.
H.S. Nuts processes and distributes tree nuts, dried fruits and other
foodstuffs.
3. Rationale for the acquisition
The Excellerate board view the acquisition as an opportunity to grow
Excellerate`s food trading business. Further to this, H.S. Nuts` management are
considered to be excellent traders and it is anticipated that they will
contribute to the turnaround of the Alpine and Fruti-Flow businesses. It is
expected that considerable synergies will flow from the merging of the Alpine
and H.S. Nuts businesses.
4. Terms of the MOU
Pursuant to the MOU, Excellerate and Ibiza will enter into an agreement on or
before 30 June 2004, pursuant to which the Fruti-Flow business will be combined
with that of Alpine (`Sale of the Combined Businesses Agreements`). The effects
of the Sale of the Combined Businesses Agreements have been included in the
financial effects as set out in paragraph 6 below.
Further to the above, H.S Nuts and Excellerate will enter into a share
subscription agreement on or before 30 June 2004 in terms of which H.S. Nuts
will subscribe for 50% less one share in Ibiza or its nominee (`Share
Subscription Agreement` or `share subscription`). The effects of the Share
Subscription Agreement have been included in the financial effects as set out in
paragraph 6 below. The share subscription, following the combining of the Alpine
and Fruti-Flow businesses will be for a nominal consideration of R49.
5. Consideration for the acquisition
The purchase price for the acquisition is R14 million. Of the total
consideration, R6 million will be settled in cash through debt finance and R8
million will stand as a loan from H.S. Nuts to Ibiza.
H.S. Nuts will also be granted an option by Excellerate to purchase not more
than 1 283 000 Excellerate shares at a price of 78 cents per share, not later
than 24 months after the effective date (`the option`). In the event of H.S.
Nuts exercising the option, the loan account of R8 million will be reduced by
the amount of the shares acquired in terms of the option.
6. Financial effects
Based on the published consolidated results of Excellerate for the 6 months
ended 31 December 2003, the pro forma financial effects of the acquisition on
Excellerate`s earnings, headline earnings, net asset value (`NAV`) and tangible
NAV per share 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 Excellerate`s financial position and results of operations.
Per Excellerate Before the After the Percentage
ordinary share acquisition acquisition Change
(cents) (1) (2) %
Earnings 1.8 2.6 (3) 44.4
Headline earnings 3.2 4.1 (3) 28.1
NAV per share 72.7 72.7 0.0
Tangible NAV 31.6 27.1 (14.2)
Notes
1) Based on the published consolidated results of Excellerate for the 6 months
ended 31 December 2003.
2) Based on the assumption that the acquisition was effected on 1 July 2003 for
income statement purposes and 31 December 2003 for balance sheet purposes.
3) Earnings and headline earnings have been adjusted to include the pro forma
income attributable to Ibiza from the H.S. Nuts business for the six months
ended 29 February 2004. The attributable income was arrived at by halving H.S.
Nuts` unaudited, unreviewed after-tax profit for the 12 months ended 29 February
2004 for a six-month period in order to make it comparable to Excellerate`s most
recent reported six-month period. Earnings and headline earnings have also been
adjusted to take into account the reversal of 49% of the losses attributable to
the Alpine and Fruti-Flow businesses which would accrue to outside shareholders
following the Share Subscription Agreement
Further to the above, adjustments have been made to take into account the after
tax interest incurred on the cash portion of the acquisition consideration of
R6,0 million at the average prime overdraft rate applicable during the period
under review and to take into account the amortisation of a portion of the total
goodwill of R8 million relating to the acquisition.
7. Suspensive conditions
The acquisition is subject to, inter alia, the following suspensive conditions:
* the completion of a due diligence into the affairs of the H.S. Nuts, the
Alpine business and the Fruti-Flow business respectively;
* the completion of the Sale of the Combined Businesses agreement;
* the completion of the Share subscription agreement; and
* the obtaining of the necessary regulatory approvals, including approval by the
Competition Board.
8. Further announcement and withdrawal of cautionary
Shareholders are advised H.S. Nuts and its subsidiaries will be changing their
year-ends from February to June to fall in line with that of Excellerate and a
group audit was therefore not conducted at 29 February 2004. An audit of H.S.
Nuts and its subsidiaries will be undertaken for the 16 months ending 30 June
2004. Once this audited information is available, which is expected to be
towards the end of July 2004, the financial effects as reflected in paragraph 6
above, will be recalculated and should there be a difference of more than 3% in
the calculation, the revised financial effects will be published.
Further to the above, shareholders are referred to the cautionary announcement
dated 9 June 2004 and are advised that caution is no longer required to be
exercised when dealing in their securities.
Johannesburg
23 June 2004
Investment bank and sponsor
Nedbank Capital
