| Mon 4 Jul 2005, 17:23 | | Sekunjalo - Disposal and acquisition announcement |
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Release Date: 04/07/2005 16:58:04 Code(s): SKJ
Sekunjalo - Disposal and acquisition announcement
Sekunjalo Investments Limited
(Incorporated in the Republic of South Africa)
(Registration number 1996/006093/06)
Share code: SKJ ISIN: ZAE000017893
(`Sekunjalo` or `the company`)
DISPOSAL OF CERTAIN PREMIER FISHING SA (PROPRIETARY) LIMITED (`PREMIER FISHING`)
CONSUMER BRANDS, THE ACQUISITION OF A FURTHER STAKE IN BIOCLONES (PROPRIETARY)
LIMITED (`BIOCLONES`) AND CAUTIONARY ANNOUNCEMENT
Disposal of certain Premier Fishing consumer brands
1. Introduction
Shareholders are advised that Sekunjalo`s 80% held subsidiary, Premier Fishing,
has entered into an agreement with Pioneer Foods (Proprietary) Limited (trading
as SAD) (`Pioneer`), dated 30 June 2005 (`the agreement`). In terms of the
agreement, Premier Fishing will dispose of the business of certain of its
consumer brands being Redro, Pecks and Iona (`the brands`) as a going concern
and certain assets related to the aforementioned brands` business, to Pioneer
effective on 29 August 2005 (`the disposal`).
The disposal will become effective upon fulfillment of the conditions precedent
set out in paragraph 6 below.
2. Nature of business
The nature of the business sold to Pioneer is the business of manufacturing,
distributing and selling meat and fish spreads under and in terms of the brands.
3. Rationale
Premier Fishing`s core business is that of exporting lobster (West Coast and
South Coast), hake and squid, the processing of pelagic fish and aquaculture
farming (abalone). Premier Fishing has developed significant competencies in the
above areas and has also recently focused on the development of brands such as
Redro, Pecks, Iona, SSF and Seagro. Sekunjalo`s board is of the view that
substantial value has been built up in these brands and that further growth in
certain of these brands would require additional capital investment. The
Sekunjalo board believes that by using the consideration from the sale of the
brands to grow existing core businesses, greater efficiencies and growth across
the Sekunjalo group will be achieved.
4. Consideration
The consideration for the business and the assets disposed being movable assets,
goodwill, material contracts and intellectual property is R39 million. A
further maximum amount of R7 million will be paid for Premier Fishing`s
inventory on hand relating to the disposal, the value of which will be agreed
between Premier and Pioneer following a joint inventory count by the parties.
The total consideration due will be settled in cash against delivery of the
inventory and will be used to reduce Sekunjalo`s short-term borrowings and fund
the growth of underlying businesses.
5. Financial effects
Financial effects of the disposal will be published in due course.
6. Conditions precedent
The disposal is subject to certain conditions precedent which pertain to a
financier releasing its cession over the stock and movable assets of Premier
Fishing, the employee representatives agreeing to the non-transfer of employees
of the going concern to Pioneer and the termination of a certain distribution
agreement to which Premier Fishing is a party. All conditions precedent must be
fulfilled or waived by 29 August 2005.
7. Service agreement
Further to the agreement, Premier Fishing and Pioneer have entered into a
service agreement in terms of which Premier Fishing shall manufacture meat and
fish spreads under and in terms of the brands for Pioneer. The service agreement
is for a minimum duration of three and a half years and is terminable on 12
months notice. Notice of termination may only be given after the first two and
a half years of the service agreement`s duration.
8. Categorisation
The disposal at this stage is a Category 2 transaction in terms of the JSE
Limited (`JSE`) Listings Requirements. However, pending a ruling to be obtained
from the Issuer Services Division of the JSE, the disposal could be categorised
as a Category 1 transaction.
Acquisition of a further stake in Bioclones
1. Introduction
Shareholders are referred to the announcement dated 28 June 2005 (`the
announcement`) in terms of which Sekunjalo would subscribe for 4 100 new
ordinary shares in Bioclones (`the first tranche subscription`) and Sekunjalo
had been granted an option to acquire a further 800 ordinary shares in Bioclones
(being 20% of Bioclones prior to the issue of the first tranche subscription
shares and not 40% as mentioned in the announcement) (`the second tranche
option`).
The agreement regarding the first tranche subscription and second tranche option
has been amended on 1 July 2005, to allow Sekunjalo to acquire a further 1 200
ordinary shares in Bioclones from Cyril Donninger by no later than 15 July 2006,
by serving a written notice to him (`the third tranche acquisition`). The third
tranche acquisition will become effective following the fulfilment of the
condition precedent set out in paragraph 6 below and the serving of the written
notice.
The rationale for the third tranche acquisition is the same as that for the
first tranche subscription and the second tranche option, details of which are
set out in the announcement dated 28 June 2005.
Following the first tranche subscription, Sekunjalo will hold 50,6% in
Bioclones. Following the first tranche subscription and the third tranche
acquisition, Sekunjalo will hold a 65,4% interest in Bioclones. Should the
second tranche option be exercised further to the first tranche subscription and
the third tranche acquisition, Sekunjalo will hold 75,3% in Bioclones.
If required, the Articles of Association of Bioclones will be amended in due
course to conform with Schedule 10 of the JSE Listings Requirements.
2. Nature of Business
The nature of the business is that of a biotechnology company devoted to the
development and manufacture of modern biotechnology products for human
pharmaceutical use, with new developments focused on the treatment of diseases
in man due to failure of cellular immune responses. The biotechnology products
are aimed at areas relating to infectious diseases, cancer and autoimmune
diseases.
There are currently 22 issued patents worldwide with a further 8 patents
pending.
3. Rationale
Sekunjalo has an interest in the healthcare sector through its pharmaceutical
and rapid diagnostic subsidiaries. The acquisition affords Sekunjalo the
opportunity to increase its presence in the pharmaceutical and biotechnology
sector worldwide through a marketing agreement for the biotech products produced
by Bioclones. Sekunjalo currently through its rapid diagnostic business (enzyme
technology), aquaculture and plant-biotechnology (Seagro), already has a
presence in the biotechnology sector. This acquisition will give it critical
mass in the pharmaceutical and biotechnology sectors with significant growth
potential.
4. Consideration
The consideration for the third tranche acquisition is R15 million to be settled
with cash or Sekunjalo `B` ordinary shares of 70 cents each, or a combination of
cash and shares.
5. Financial effects
Financial effects of the third tranche acquisition will be published in due
course.
6. Condition precedent
The third tranche acquisition is subject to Sekunjalo board approval.
7. Categorisation
The first tranche subscription and the third tranche acquisition, when
aggregated, are a Category 2 transaction in terms of the JSE Listings
Requirements. A circular containing full details of the first tranche
subscription and third tranche acquisition will be despatched to Sekunjalo
shareholders in due course.
Cautionary announcement
Shareholders are advised to exercise caution when dealing in Sekunjalo`s
securities until the financial effects of the disposal and the third tranche
acquisition are published and the ruling regarding the disposal referred to in
paragraph 8 above is obtained.
Cape Town
4 July 2005
Sponsor
Nedbank Capital
Attorneys regarding the disposal
Grant Gunston Incorporated
