| Tue 19 Jul 2005, 12:50 | | Acquisition Of Quality Products |
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Beige Holdings Limited - Acquisition Of Quality Products In Partnership With
Thebe Healthcare (Proprietary) Limited And Mothebe Investments (Proprietary)
Limited, Proposed Rights Offer And Withdrawal Of Cautionary Announcement
BEIGE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/006871/06)
(`Beige` or `the company`)
ISIN Code: ZAE000034161 Share code: BEG
ACQUISITION OF QUALITY PRODUCTS DIVISION AND QUALITY PRODUCTS (PROPRIETARY)
LIMITED (TOGETHER `QUALITY PRODUCTS`) IN PARTNERSHIP WITH THEBE HEALTHCARE
(PROPRIETARY) LIMITED (`THEBE`) AND MOTHEBE INVESTMENTS (PROPRIETARY) LIMITED
(`MOTHEBE`), PROPOSED RIGHTS OFFER AND WITHDRAWAL OF THE CAUTIONARY ANNOUNCEMENT
1. Introduction
Following the signing of an agreement dated 18 July 2005, the board of
directors of Beige are pleased to announce the acquisition by Beige, in
partnership with Thebe and Mothebe, of the shares in and the divisional business
and assets of Quality Products from Unilever South Africa Home and Personal Care
(Proprietary) Limited with effect from 31 August 2005, subject to the conditions
precedent set out in paragraph 4 below. The shares will be acquired in the
ratio of 50% plus one share by Thebe, 40% by Beige and 10% less one share by
Mothebe.
The consideration for the acquisition is R26 500 000 and will be settled in cash
on a pro rata basis to the shareholding acquired. An initial amount of R8.5
million is payable on 30 September 2005 and the balance will be settled over a 5
year period, at R3.6 million per annum. Beige will raise its share of the
necessary funding for the acquisition through an underwritten rights offer, the
details of which will be announced in due course.
2. Rationale for the acquisition
Quality Products is a leading soap, household products and toiletries
manufacturer that provides an exclusive contract manufacturing and packing
service to branded pharmaceutical, cosmetics, toiletries and home-care markets.
The company has supply agreements in place for minimum sales of R129 000 000 per
annum for the next 5 years. An additional amount of approximately R22 000 000
will be payable in respect of stock-on-hand, which will be utilised in
fulfilling these supply agreements. The joint-acquisition of Quality Products
will result in it becoming the most significant black-empowered contract
manufacturing company in the household bath and body care market and it is the
intention of Beige, Thebe and Mothebe to extend this empowerment transaction to
Beige after a 5-year period, through a share-swop agreement in respect of
Quality Products shares that will result in Thebe becoming a significant
shareholder in Beige.
3. Financial Effects of the acquisition
The table below summarises the pro forma financial effects of the acquisition of
Quality Products on the audited, published results of Beige for the year ended
28 February 2005 as though the acquisition had been in effect from 01 March 2004
and is the responsibility of the directors. The pro forma financial effects
have been prepared for illustrative purposes only and due to their nature, may
not give a fair reflection of Beige after the acquisition.
Fully Publish Pro Percent Pro Percent
diluted ed forma age forma age
information 28 28 change 28 change
Februar Februa Februar
y 2005 ry y 2005
2005 After
acquisi
(%) tion (%)
Before1 After and
acquis rights
ition offer6
Attributabl (1.95) (0.74) 62.0% (0.58) 70.4%
e 2,3,4
(loss)/earn
ings per
share
(cents)
Headline (1.09) 0.122, 110.6% 0.03 102.8%
(loss)/earn 3,4
ings per
share
(cents)
Net asset 6.73 6.73 -- 6.23 (7.4%)
value
(cents)
Tangible 6.73 0.285 (104.2% 1.24 (81.5%)
net asset )
value per
share
(cents)
Weighted 291 279 291 -- 411 279 41.2%
average no. 279
of shares
in issue
(`000)
Shares in 295 145 295 -- 415 145 40.7%
issue at 145
year end
(`000)
Notes:
1. The Before column is based on extracts from the audited financial information
as published by Beige for the year ended 28 February 2005.
2. The net income before taxation for the Quality Products Division for the year
ended 31 December 2004, after an adjustment for notional tax of 30%, has been
used to calculate earnings and headline earnings per share as though the
acquisition had been implemented for a 12-month period.
3. The net income before taxation of the Quality Products division excludes
Unilever inter-divisional costs for service fees and shared services.
4. It has been assumed that Beige will consolidate Quality Products and minority
interests of 60% of profits after taxation have accordingly been adjusted for.
5. Goodwill of approximately R18.4 million will arise on the acquisition, in
addition to the acquisition of approximately R2.2 million of intellectual
property within Quality Products. No amortisation of goodwill has been assumed.
6. An initial capital injection into Quality Products of R15 million, of which
Beige`s commitment is R6 million, is required. It has been assumed that the R6
million payable by Beige will be funded by way of a rights issue of 120 000 000
new shares at 5 cents per share.
7. Underwriting and circular costs of R925 000 and an adjustment for 30%
notional taxation has been assumed.
4. Conditions precedent
The acquisition is subject to the normal conditions precedent that would be
applicable to transactions of this nature, which conditions are indivisible and
include, inter alia, approval by the competition commission, the JSE Limited,
the Securities Regulation Panel, the conclusion of a shareholders agreement with
Thebe and Mothebe and the approval by shareholders in a general meeting.
5. Documentation
Salient features and dates of the proposed rights offer will be announced in due
course. A circular containing full details of the acquisition, the proposed
rights offer and a notice of general meeting of Beige shareholders is in the
process of being prepared and will be posted to shareholders.
6. Withdrawal of the Cautionary Announcement
Following the above announcement shareholders are advised that the cautionary
announcement dated 30 June 2005 has been withdrawn.
In accordance with AltX Listings Requirements, shareholders are advised of the
risks of investing in a company listed on AltX and are advised that the JSE does
not guarantee the viability or the success of a company listed on AltX. In
terms of JSE Listings Requirements a Designated Adviser has to be retained by
the company. The Designated Adviser is required to, inter alia, attend all
board meetings held by the company to ensure that all JSE Listings Requirements
and applicable regulations are complied with, approve the financial director of
the company and guide the company in a competent, professional and impartial
manner. If the company fails to retain a Designated Adviser it must make
arrangements to appoint a new Designated Adviser within 10 business days,
failing which the company faces suspension of trading of its securities. If a
Designated Adviser is not appointed within 30 days of its suspension the company
faces the termination of its listing without an offer to minorities.
Johannesburg
19 July 2005
Designated Advisor Corporate Advisor
Arcay Corporate Services Arcay Merchant
