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Tiwheel - Acquisition of American Automotive Wheel Manufacturing Business
TIGER WHEELS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 1970/011662/07)
(`TIWHEEL` OR `THE COMPANY`)
SHARE CODE: TIW & ISIN NUMBER: ZAE000007407
ACQUISITION OF AMERICAN AUTOMOTIVE WHEEL MANUFACTURING BUSINESS
1. DETAILS OF THE ACQUISITION
Shareholders are advised that ATS Beteiligungs GmbH (`ATS`), which is 74%
owned by Tiwheel, has entered into an agreement dated 8 July 2005 (`the
agreement`) with Argent Metals Technology (Kentucky) LLC to acquire 100% of
the issued share capital of Warsaw LLC (`Warsaw`), a Kentucky limited
liability company with effect from 1 July 2005. The purchase consideration
is USD 24 million plus the value of the accounts receivable and inventory
as at 30 June 2005, which is not expected to be material (`the
acquisition`). In addition, a further amount up to a maximum of USD 4
million may be payable over a two-year period based on a formula relating
to turnover achieved by Warsaw. The acquisition will be funded by existing
resources and long term loans to be raised by ATS from Tiwheel`s global
bankers.
2. RATIONALE FOR THE ACQUISITION
Warsaw is a US based company involved in the manufacture and sale of larger
diameter automotive alloy wheels. The company`s only plant has been totally
re-equipped and has recently commenced production after its re-
commissioning. Tiwheel has identified North America as an excellent market
for larger diameter alloy wheels. The acquisition provides the group with
the opportunity to entrench it`s footprint in the US original equipment
market. Warsaw has secured a multi year sourcing agreement with a major US
automotive producer.
3. CONDITIONS PRECEDENT
All conditions precedent have been fulfilled.
4. CATEGORISATION OF THE ACQUISITION
The acquisition is a Category 3 transaction for Tiwheel in terms of section
9.5(a) of the JSE Limited Listings Requirements and as such no circular to
shareholders is required.
5. PRO FORMA FINANCIAL EFFECTS
The pro forma financial effects of the acquisition on the group`s earnings,
headline earnings, net asset value and tangible net asset value are not
material. As Warsaw has not been trading it has no profit history.
Accordingly, no impact is expected on Tiwheel`s income in the short term,
but positive results should be achieved thereafter. The Warsaw plant is
currently in production with a full order book. The acquisition is at a
discount to the tangible net asset value of USD 45 million.
Johannesburg
5 August 2005
SPONSOR
SASFIN CORPORATE FINANCE
A DIVISION OF SASFIN BANK LIMITED
Date: 08/08/2005 07:50:08 AM
Produced by the JSE SENS Department
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