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Beige - Acquisition of business and assets, Exercise of Call Options
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 BUSINESS AND ASSETS OF VALUE CHEMICALS CC, EXERCISE OF CALL
OPTIONS BY BEIGE DIRECTORS AND RELATED DIRECTORS` DEALINGS
1. Introduction
Following the signing of an agreement dated 31 August 2005, the board of
directors of Beige are pleased to announce the acquisition by Beige, of the
shares in Arcfin Trading 46 (Proprietary) Limited (`Arcfin`) which has
acquired the divisional business and assets of Value Chemicals CC relating
to the manufacture of Eco-Soft laundry soap powder (`Value Chemicals
acquisition`). The vendor of Arcfin and member of Value Chemicals, Anton
Botha, relocated the plant and business during the first months of the
financial year in conjunction with the relocation of Beige`s other
factories and has been operating from Beige`s Chloorkop premises. The
acquisition is with effect from 01 March 2005 and there are no conditions
precedent. Anton Botha has been appointed as general manager overseeing
the Beige operations at Chloorkop.
The consideration for the acquisition of Arcfin is R2 000 000 and will be
settled in cash of R1 000 000 on or before 30 November 2005 and through the
issue of 13 333 333 new shares in Beige at 7.5 cents per share. A profit
warranty on the basis of gross profit has been signed in terms of which
additional shares will be issued to Anton Botha at 7.5 cents in the event
that gross profit exceeds R2 000 000 over the 18 month period ending 31
August 2006 on a Rand for Rand pro rata basis up to R3 000 000 and
thereafter on a one third basis exceeding R3 000 000. The increase in
purchase price resulting from the warranty is capped at R2 000 000.
2. Rationale for the acquisition
Eco-Soft laundry soap is a high quality soap powder, which is complementary
to Beige`s existing laundry soap range, which is at the lower end of the
market. In addition, Anton brings additional management expertise to the
group.
3. Exercise of call options and related directors` dealings
Shareholders are advised that John Rawlings and Ian Stromin, directors of
Beige, have exercised their rights on 31 August 2005 in relation to call
options of 10 800 000 and 10 640 000 new Beige shares respectively at 7.5
cents in terms of option agreements dated 14 March 2001. The total
consideration due to Beige is R810 000 and R798 000. Certain members of
the consortium that will be underwriting the Beige rights offer, for which
details are still to be announced, have agreed to lend the directors the
funds required to exercise their options, in return for which the
consortium members will be entitled to follow a certain percentage of the
rights that will attach to the new shares. Following the finalisation of
the rights offer, the above shares will be purchased by the consortium
members. Clearance for the transaction has been obtained in accordance
with paragraph 3.63 of the JSE Listings Requirements.
4. Financial effects of the acquisition and the exercise of call options
The table below summarises the pro forma financial effects of the
acquisition of Value Chemicals 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 diluted Published Pro forma Percentage Pro forma Percentage
information 28 28 February change 28 change
February 2005 February
2005 After 2005
acquisition (%) After (%)
Before (2,3,4) option
(1) issue
(5,6)
Attributable (1.95) (1.61) 17.4% (1.47) 24.7%
loss per
share (cents)
Headline loss (1.09) (0.79) 27.5% (0.70) 35.6%
per share
(cents)
Net asset 6.73 6.76 0.5% 6.81 1.2%
value (cents)
Tangible net 6.73 6.28 (6.7%) 6.36 (5.5%)
asset value
per share
(cents)
Weighted 291 279 304 612 4.6% 326 052 11.9%
average
shares in
issue (`000)
Shares in 295 145 308 478 4.6% 329 918 4.2%
issue at year
end (`000)
Fully diluted 321 145 334 478 4.2% 334 478 4.2%
shares (`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 Value Chemicals Division for
the year ended 28 February 2005, 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. Goodwill of approximately R1.5 million will arise on the acquisition.
No amortisation of goodwill has been assumed.
4. Increase in number of shares of 13 333 333 in terms of agreement.
5. Assumed that the introduction of share capital at the beginning of the
period would reduce borrowings of the company, with a resultant
reduction in interest paid assumed at an interest rate of 10.5%, less
notional taxation calculated at 30%.
6. The exercise of the call options increases shares in issue by 21 440
000 new shares.
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
31 August 2005
Designated Advisor
Arcay Corporate Services
Corporate Advisor
Arcay Merchant
