| Thu 9 Jun 2005, 16:26 | | Disposal of the Repairs and Services and |
|
DEI - Disposal of the Repairs and Services and Replacement Parts Divisions
Delta Electrical Industries Limited
Share code: DEL ISIN: ZAE000002036
(Incorporated in the Republic of South Africa)
(`the company` or `DEI`)
Disposal of the Repairs and Services and Replacement Parts divisions
1.Introduction
Following the cautionary announcements of 2 November 2004, 14 December 2004, 25
January 2005 and 2 March 2005, shareholders were advised on 13 April 2005 that a
number of offers were received for the Repairs and Services and Replacement
Parts divisions.
Shareholders were further advised on 25 May 2005 that these offers were still
under consideration and that the company was making good progress towards
clarifying the terms of the offers.
The company is pleased to announce that it has reached agreement for the
disposal (`the disposal`) of the Repairs and Services division and the
Replacement Parts division, as going concerns, to an Ethos and Actis led private
equity consortium for an aggregate consideration of R1,296 million.
2.The private equity consortium
The consortium comprises Actis, Ethos Private Equity Limited, Old Mutual Life
Assurance Company (South Africa) Limited and black economic partners Sphere
Holdings (Proprietary) Limited and AKA Capital (Proprietary) Limited (`the
purchaser`).
3.Conditions precedent
The conclusion of the disposal is subject to the following conditions precedent
being fulfilled:
3.1 Approval by DEI`s shareholders in general meeting;
3.2 Approval by Delta plc`s shareholders in general meeting;
3.3 Approval of the transaction by the competition authorities; and
3.4 The financing required to implement the disposal being made available in
terms of the commitment letter issued by the Mandated Lead Arranger and
Underwriter, Barclays Bank plc, South Africa Branch.
4. Consideration
The purchase price will be payable in cash and is to be settled as follows:
4.1 An initial payment of R1,296 million is to be paid on the effective date.
The initial payment constitutes the value placed on the Repairs and Services and
Replacement Parts divisions at 27 December 2004; and
4.2 The purchase price will be determined within 30 days of the effective date
when an adjustment to the initial payment will be determined and settled. The
adjustment referred to will be determined by the movement in the net asset value
of the divisions between 27 December 2004 and the effective date. The effective
date is the date on which all conditions precedent will have been fulfilled.
5. Rationale for disposal
During the past a number of parties have expressed an interest in acquiring the
Repairs and Services and Replacement Parts divisions. The board of DEI decided
to conduct a process to explore the level of interest in the divisions and a
number of attractive offers were received. The board of DEI has decided to
dispose of the divisions to the purchaser and return capital to DEI
shareholders.
Following the disposal of the Repairs and Services and Replacement Parts
divisions, DEI`s strategic focus will be on the development of the EMD business.
6. Financial effects
For the year ended 27 December 2004, the divisions contributed a profit after
taxation of R122.4 million to the consolidated attributable profits of DEI.
The following table reflects the unaudited pro forma financial effects of the
disposal on the earnings and headline earnings per DEI share, assuming the
disposal was effective on 28 December 2003 and that the proceeds were received
on that date and invested at an after tax rate of 5.25%. The pro forma financial
information is prepared for illustrative purposes only and because of its nature
may not fairly present the issuer`s financial position, changes in equity,
results of operations or cash flows.
Unaudited pro forma calculations of the net asset and net tangible asset value
per share are calculated as at 27 December 2004 and assume that the disposal was
effective on 27 December 2004.
Audited Pro forma
Before After Change
(cents) (cents) %
Earnings per share (1), (3) 217.1 2,051.9 845
Headline earnings per share (1), (4) 220.8 111.5 (50)
Net asset value per share at 1,844.7 3,755.2 104
27 December 2004 (2)
Net tangible asset value per share at 27 1,830.6 3,755.2 105
December 2004 (2)
1. Based on the weighted average number of 48,753 million shares in issue during
the financial year ended 27 December 2004.
2. Based on 49,166 million shares in issue at 27 December 2004.
3. Earnings per share includes the profit on disposal.
4. Headline earnings per share excludes the profit on disposal.
Unaudited pro forma calculations of earnings and headline earnings per share
assume:
- the disposal was effective on 28 December 2003, being the beginning of the
financial year ended 27 December 2004;
- the initial payment of R1,296 million was received on
28 December 2003 and was invested to earn an after-tax return of 5.25% during
the financial year ended 27 December 2004 (being the average interest rate
earned by DEI on cash balances for the year ended 27 December 2004.)
7. Circular to shareholders
A circular to DEI shareholders, containing details of the disposal and
incorporating a notice of general meeting of DEI shareholders will, subject to
the approval by the JSE Securities Exchange South Africa (`JSE`) and the
Securities Regulation Panel (`SRP`), be mailed to shareholders within 28 days of
this announcement or within such longer period as the JSE and SRP may approve.
8. Withdrawal of cautionary announcement
Shareholders of DEI are advised that caution is no longer required when dealing
in DEI securities on the JSE.
Sandton
9 June 2005
Financial adviser and transaction sponsor
UBS
Date: 09/06/2005 04:29:09 PM
Produced by the JSE SENS Department
