| Fri 20 Aug 2004, 15:36 | | Announcement |
|
Kolosus Holdings Limited - Announcement
Kolosus Holdings Limited
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 1978/000181/06)
JSE SHARE CODE: KOS NSX SHARE CODE: KOL
ISIN CODE: ZAE000050258
(`KOLOSUS` OR `THE COMPANY`)
Announcement relating to:
- a proposed increase in and change to the authorised share capital of the
company;
- the acquisition of the entire issued share capital of Marker Investments
(Pty) Ltd (`Marker`), the entire issued share capital of Hosaf Fibres (Pty)
Limited (`Hosaf`), the business of Glodina Holdings Limited, including the
entire issued share capital of Dano Textile Industries (Pty) Ltd, as a going
concern (`Glodina`) and the entire issued share capital of Casa Rosada
Investments (Pty) Ltd (`Casa Rosada`) (collectively `certain businesses`);
- a proposed change of name of Kolosus to KAP International Limited or such
name as the Registrar of Companies may approve;
- the proposed change to the board of directors of the company.
(collectively, `the proposals`).
1. Introduction
Further to the cautionary announcement dated 3 August 2004, PSG Capital is
authorized to announce that an agreement in principle has been reached between
Daun & Cie AG and KAP Beteiligungs AG (collectively `the Daun group`) and
Kolosus in terms of which Kolosus will acquire certain businesses from the Daun
group (`the acquisitions`). The purpose of this announcement is to inform
Kolosus shareholders of the terms and conditions of the acquisitions as well as
various structural proposals regarding Kolosus, including, inter alia, a change
of name and an increase in the authorised share capital of the company.
2. An increase in and changes to the authorised share capital
Kolosus currently has insufficient unissued authorised share capital to settle
the share element of the consideration for the acquisitions and for any possible
future acquisitions. It is therefore proposed to increase the authorised share
capital of Kolosus by creating 1 billion new authorised ordinary shares with a
par value of 20 cents each (`ordinary shares`).
3. The acquisitions
3.1 Nature of the Daun group acquisitions
Marker
Marker is the holding company for Feltex Limited (`Feltex`) and Conshu Trading
(Proprietary) Limited (`Conshu`). Feltex is a manufacturer of industrial
footwear and automotive components. Conshu operates under the Jordan and
Company trade name and is based in Cape Town, supplying men`s and ladies
footwear to both the fashion and sports markets in South Africa.
Glodina
Glodina is a textile manufacturer, specializing in the weaving and knitting of
terry-toweling products. The company was established in 1952 and has its
manufacturing operations located in Hammarsdale, KwaZulu Natal. All Glodina`s
operating activities are performed through its wholly owned subsidiary Dano
Textile Industries (Pty) Ltd (`Dano`). Kolosus will be acquiring the business
of Glodina consisting of all the shares in Dano and any other assets or claims
against Glodina.
Hosaf
Hosaf is a polyester manufacturer that produces two polyester commodities
namely: Polyester fibre which is supplied to the textile industry and
polyethylene terephthalate resin which is supplied primarily to the beverage and
food packaging industries. Hosaf operates from 3 sites namely Cape Town, Durban
and Alrode in Gauteng.
3.2 Terms and Conditions
Kolosus will acquire the Daun group businesses from the Daun group, with effect
from 1 July 2004 (subject to the fulfillment of the conditions precedent
referred to in 3.4 below). The consideration payable for the acquisitions
amounts to R375,9 million which will be satisfied by the issue of 250,6 million
ordinary shares at 150 cents per share.
3.3 Rationale for the acquisitions
The intention with the acquisitions is to form a group that will have a base of
diversified industrial companies that will provide an acceptable growth in
earnings. Furthermore it will enable the Daun group to consolidate certain of
its South African investments into a single vehicle that would allow amongst
other things for black economic empowerment, capital raising, optimization of
technical skills and resources and a mechanism for management participation.
3.4 Conditions precedent
The acquisitions are subject, inter alia, to the following conditions precedent:
- approval by Kolosus shareholders in general meeting;
- the necessary approvals from the relevant regulatory authorities;
- the approval by Glodina shareholders in general meeting incorporating a
fair and reasonable opinion from an independent advisor to Glodina;
- final agreements being signed between the parties.
4. Related party transaction
Prior to the implementation of the proposals, the Daun group owns 96% of the
issued share capital in Kolosus and, other than Glodina where it owns 77% of the
issued share capital, it directly or indirectly owns 100% of the issued share
capital of the businesses to be acquired.
In terms of the listings requirements of the JSE Securities Exchange South
Africa (`the JSE`), the Daun group is classified as a related party to both
Kolosus and Glodina. As such, a majority of the votes of Kolosus shareholders,
other than the Daun group, will be required to approve the acquisitions at the
Kolosus general meeting detailed in 8 below (`the general meeting`).
5. Change of name and adoption of new memorandum of association
To better reflect its future strategy it is proposed that Kolosus be renamed
`KAP International Limited` or such name as the Registrar of Companies may
approve and that a new memorandum of association be adopted to reflect the
company`s proposed name, main business and object as well as the revised capital
structure of the company.
6. Financial effects
The financial effects of the proposals on Kolosus will be included in the
interim results announcement of Kolosus, which is expected to be released within
the next 2 weeks.
7. Opinions, recommendations and undertakings
PSG Capital Limited (`PSG`), the independent advisor to Kolosus, has considered
the terms and conditions of the acquisitions, insofar as they pertain to Kolosus
shareholders. PSG is of the opinion that the terms and conditions of the
acquisitions are fair and reasonable to Kolosus shareholders.
The Daun group is classified as a related party to Kolosus in terms of the
Listings Requirements of the JSE and, as such, the Daun Group have undertaken to
refrain from voting at the general meeting in respect of the ordinary resolution
to be proposed thereat to approve the acquisitions.
The board of directors of Kolosus is of the opinion that the terms and
conditions of the acquisitions are fair and reasonable to Kolosus shareholders.
Accordingly, the board of directors of Kolosus recommends that Kolosus
shareholders vote in favour of the resolutions to be proposed at the general
meeting to approve the acquisitions and the proposals.
8. General meeting
Approval for the special and ordinary resolutions necessary to implement the
proposals will be sought from shareholders at a general meeting to be held on or
about Wednesday, 27 October 2004.
9. Corporate Governance and JSE Listing Requirements
As part of the proposals and in line with good corporate governance it is
proposed that subject to the approval of the acquisitions that the board of
directors of Kolosus be changed. It is further proposed that both the audit
committee and the remuneration committee be changed to comply with the King
Report II on Corporate Governance.
In order to comply with the aforesaid report, the role of chairman and CEO will
be split. Mr. Claas Daun will be the new chairman and Mr. Paul Schouten the
managing director.
Once the acquisitions have been implemented, the board will be reconstituted to
comprise 2 executive directors and 5 non-executive directors. Full details will
be contained in the circular to shareholders.
The proposals are viewed as a reverse listing in terms of the JSE Listing
Requirements and consequently the company would be required to comply with all
the listing criteria as if the company is a new listing. On implementation of
the proposals or as soon as possible thereafter the directors of Kolosus will
address the free float of the company to enable it to comply with the JSE
Listing Requirements. This might include amongst other things a black economic
empowerment transaction and a private placing.
10. Documentation and cautionary announcement
The financial effects of the transaction will be published as soon as Kolosus`
interim results are available. Accordingly, until such announcement is
published and the financial results are available shareholders are advised to
continue to exercise caution in dealing in their Kolosus shares.
Further details of the proposals will be included in a circular, incorporating a
notice of a general meeting of shareholders, which will be posted to
shareholders on or about Friday, 1 October 2004. Simultaneously, a proposed pre-
listing statement for Kolosus will also be posted to shareholders.
Paarl
20 August 2004
Independent advisor and sponsor
PSG Capital
Attorneys
Hofmeyr Herbstein & Gihwala Incorporated
Reporting accountants
Deloitte & Touche
Date: 20/08/2004 03:18:06 PM Produced by the JSE SENS Department
