| Fri 27 May 2005, 17:51 | | Disposal Of Alpine Engineered Products |
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Dorbyl Limited - Disposal Of Alpine Engineered Products
DORBYL LIMITED
(Registration number 1911/001510/06)
(Incorporated in the Republic of South Africa)
Ordinary share code: DLV ISIN: ZAE000002184
(`Dorbyl` or `the company`)
Disposal of Alpine Engineered Products
1. INTRODUCTION
Further to the cautionary announcements dated 14 January, 3 March and 14 April
2005, shareholders are advised that, on Wednesday, 25 May 2005, Dorbyl entered
into an agreement to dispose of its Alpine Engineered Products Division
(`Alpine`) (`the disposal`).
2. TERMS OF THE DISPOSAL
2.1 Consideration
The purchase consideration in terms of the disposal is US$158 million, payable
in cash. The purchase consideration will be increased by a notional interest
charge of 6% per annum, compounded daily in arrears, calculated from 15 June
2005 until the date the transaction is implemented.
It is the intention of Dorbyl to distribute the major portion of the proceeds
on the disposal to its shareholders.
2.2 Transaction structure
The assets of Alpine are held through Alpine Holdings Inc. and Alpine Systems
Corporation (`the operating subsidiaries`). The operating subsidiaries are
held by Dorbyl UK (Holdings) Limited (`DUK`), a wholly owned subsidiary of
Dorbyl. The disposal will be implemented by either a disposal by DUK of its
interests in the operating subsidiaries or, alternatively, the disposal by
Dorbyl of its interest in DUK.
2.3 Details of the acquirer
The acquirer is Alpine Engineered Products Acquisition Corporation,
representing a consortium led by Stonebridge Partners Equity Fund III, LP, a
private equity firm based in the United States of America. Senior members of
the Alpine management team will have a limited investment in the consortium.
2.4 Conditions precedent
The disposal is subject to the fulfillment of, inter alia, the following
conditions precedent:
- the passing by shareholders of an ordinary resolution approving the disposal
in terms of , inter alia, section 228 of the Companies Act, 1973 (Act 61 of
1973);
- the approval, to the extent required, of the JSE Securities Exchange South
Africa (`JSE`), the Securities Regulation Panel, the South African Reserve
Bank, and such other regulatory bodies as may be required, in South Africa,
the United Kingdom and the United States of America; and
- the acquirer notifying Dorbyl that the financing required to implement the
transaction has been made available in terms of the commitment letters issued
by its financiers.
2.5 Effective date
The effective date of the disposal is 1 April 2005.
3. Rationale for the disposal
Alpine is a provider of services, products, machinery and software to the
truss manufacturing industry. Alpine operates through a network of
strategically placed stamping plants, engineering offices and related
facilities in North America and the United Kingdom.
Alpine was acquired by Dorbyl in June 1998 for an initial purchase
consideration of approximately US$50 million. In the seven years since
acquisition, Dorbyl has added significant value to Alpine and the business has
grown its revenues and earnings materially. The board of Dorbyl believes that
the disposal provides the company with the opportunity to release value for
Dorbyl shareholders, given that the purchase consideration fully values Alpine
and is higher than the value historically attributed to Alpine by the market.
4. Financial effects
The table below sets out the pro forma financial effects of the disposal on
Dorbyl`s published:
- earnings per share and headline earnings per share for the year ended 31
March 2005, based on the assumption that the disposal had been implemented on
1 April 2004; and
- net asset value and net tangible asset value per share at 31 March 2005,
based on the assumption that the disposal had been implemented on 31 March
2005.
The pro forma financial effects have been prepared for illustrative purposes
only and, due to the nature thereof, may not give a true reflection of the
effect of the disposal.
Before After Change
(cents) (cents) (%)
Earnings per share 211.8 115.3(1) (45.6)
Headline earnings per share 275.6 179.1(1) (35.0)
Net asset value per share 2 195 4 486(2)(3) 104.4
Net tangible asset value per share 2 035 4 486(2)(3) 120.4
Notes:
1. Based on the assumption that the purchase consideration had been converted
into South African Rands at an exchange rate of R6.2336:US$1, being the
average exchange rate for the twelve months ended 31 March 2005, and had
earned interest at 7.62% before tax for the year ended 31 March 2005.
2. Based on the assumption that the purchase consideration had been converted
into South African Rands at an exchange rate of R6.2349:US$1, being the
exchange rate ruling on 31 March 2005.
3. Excludes the effect which Secondary Tax on Companies incurred on the
distribution of the proceeds on the disposal to shareholders will have on net
asset value and net tangible asset value per share.
The net value of the Alpine assets consolidated by Dorbyl as at 31 March 2005
was US$35.6 million and the earnings attributable to Alpine for the year ended
31 March 2005 amounted to US$13.4 million.
5. Appointment of independent Expert
The Dorbyl board has appointed Rand Merchant Bank to advise it on whether the
terms of the disposal are fair and reasonable. Their opinion in this regard
will be included in the circular to be posted to shareholders as set out
below.
6. Further documentation
A circular setting out the detailed terms of the disposal and convening a
general meeting of shareholders to approve the disposal is in the process of
being finalised and will be posted to shareholders within 28 days of this
announcement or within such longer period as the JSE may allow in the
circumstances.
Johannesburg
27 May 2005
Independent Expert and transactional sponsor
RAND MERCHANT BANK
A division of FirstRand Bank Limited
Attorneys
WEBBER WENTZEL BOWENS
Sponsor
PSG CAPITAL
