| Thu 11 Aug 2005, 17:49 | | Cullinan - Acquisition of New Horizons |
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Cullinan - Acquisition of New Horizons
CULLINAN HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1902/001808/06)
Share code CUL ISIN ZAE000013710
(`Cullinan` or `the company`)
ACQUISITION OF NEW HORIZONS HOLIDAYS (PROPRIETARY) LIMITED
(`New Horizons`)
1. Introduction
The board of directors of the company wishes to advise that Cullinan has
entered into an agreement dated 11 August 2005 with the vendor referred to
in paragraph 3 below in terms of which it will acquire 100% of the issued
share capital of New Horizons (`the acquisition`). The acquisition is
subject to the suspensive conditions set out in paragraph 6 below.
2. Nature of business and rationale for the acquisition
New Horizons is an outbound tour operator based in Perth, Australia that
promotes holidays in the Far East to the Western Australian market. It is
the market leader in this sector and has over 25 years` experience in the
business.
It has been consistently profitable and is well managed.
The acquisition is in line with Cullinan`s commitment to grow its portfolio
of travel interests, both domestically and internationally. The
acquisition will also enable the company to spread its risk, increase its
buying power, extend its product range and add to its distribution
capacity, as well as share common facilities and knowledge. In addition,
the acquisition is being effected at a time of relative Rand strength.
The outbound division of Cullinan (Thompsons Tours) is a market leader in
the sale of Far East travel products and the combined focus in this area
will create opportunities to improve turnover and profitability. Southern
Africa as a destination will be added to the New Horizons product range and
will be supplied by Thompsons.
3. The acquisition
Cullinan has, subject to the suspensive conditions referred to in paragraph
6 below, acquired New Horizons from Travcorp Financial Services Limited
(`the vendor`), for a consideration of R32 million, to be settled by the
creation and issue by Cullinan of 80 000 000 11% cumulative compulsorily
convertible preference shares at 40 cents per share, convertible on a one-
for-one basis into ordinary shares in the company three years and a day
after the date of their initial issue.
The effective date of the acquisition is 1 January 2005.
The agreement between the parties contains warranties that are usually
found in agreements regarding transactions of this nature.
4. Related party transaction and appointment of an independent professional
expert (`the IPE`)
The vendor is a wholly-owned subsidiary of The Travel Corporation Limited,
the indirect controlling shareholder of Cullinan. The acquisition
therefore constitutes a related party transaction in terms of the Listings
Requirements of JSE Limited (`JSE`) and requires approval by the
shareholders of Cullinan in general meeting, excluding the related party
and its associates. It is also subject to the issue of an opinion as to the
fairness and reasonableness of the acquisition by the IPE.
The board of directors of Cullinan has appointed BDO QuestCo (Proprietary)
Limited as the IPE and the appointment has been ratified by JSE. The fair
and reasonable statement prepared by the IPE will form part of the circular
to shareholders referred to in paragraph 7 below.
5. Financial effects of the acquisition
The table below sets out the financial effects of the acquisition on the
earnings, headline earnings, net asset value and net tangible asset value
per share in Cullinan based on the unaudited financial statements of the
company for the six months ended 31 March 2005. The financial effects are
the responsibility of the directors of Cullinan and are prepared for
illustrative purposes only. Because of their nature, the financial effects
may not fairly present the financial position of the company, changes in
equity, results of its operations or cash flows after the acquisition.
After the acquisition
Before After
conversion conversion
of of
Before the preference preference
acquisition shares Change shares Change
Notes (cents) (cents) (%) (cents) (%)
Earnings per share 1 1,27 1,38 8,66 1,49 17,32
Headline earnings
per share 1 1,45 1,66 14,48 1,74 20,00
Net asset value
per share 2 9,00 13,46 49,56 12,11 34,56
Net tangible asset
value per share 2 6,30 6,42 1,90 5,78 (8,25)
Number of shares
in issue (000`s) 718 188 718 188 - 798 188 11,14
Notes:
1. On the assumption that the acquisition was effective throughout the
six months ended 31 March 2005. In calculating these effects,
goodwill has been amortised. In the event of early adoption of
International Financial Reporting Standards amortisation of goodwill
will not be required. An annual impairment test on all investments
will be required.
2. O n the assumption that the acquisition was effective on 31 March 2005.
6. Suspensive conditions
The acquisition is subject to the following material suspensive conditions:
- approval by the relevant regulatory authorities, including JSE and the
Exchange Control Division of the South African Reserve Bank; and
- approval by the shareholders of the company in general meeting of the
necessary special and ordinary resolutions required to implement the
acquisition and subsequent registration of the special resolutions by
the Registrar of Companies.
7. Circular to shareholders
A circular to shareholders containing full details of the acquisition and a
notice convening a general meeting of Cullinan will be dispatched to
shareholders in due course.
By order of the board
Johannesburg
11 August 2005
Corporate adviser
LANARK FINANCIAL SERVICES
Auditors
BDO Spencer Steward (JHB) Inc.
Chartered Accountants (SA)
Registered Accountants and Auditors
Independent professional expert
BDO QuestCo (Pty) Ltd
(Registration number 2004/018276/07)
Sponsor
LPC MANHATTAN MOELA (Pty) Ltd
(Registration number 2001/009215/07)
