| Tue 6 Sep 2005, 11:51 | | Enaleni - Acquisition of FirstPharm and further ca |
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Enaleni - Acquisition of FirstPharm and further cautionary announcement
Enaleni Pharmaceuticals Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/018027/06)
(JSE code: ENL ISIN: ZAE000067740)
(`Enaleni` or `the company`)
Warning: The listing of ordinary shares in the company is on ALTx. Investors
are advised of the risks of investing in a company listed on ALTx. Investors are
advised that the JSE does not guarantee the viability or the success of a
company listed on ALTx. In terms of the Listings Requirements, the company is
obliged to appoint and retain a Designated Adviser, which is required to, inter
alia, attend all board meetings held by the company to ensure that all the
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 the
prospect of an appropriate offer to minority shareholders.
ACQUISITION OF XERAGEN LABORATORIES (PROPRIETARY) LIMITED TRADING AS FIRSTPHARM
(`FirstPharm`) AND FURTHER CAUTIONARY ANNOUNCEMENT
1. Introduction
1.1 Shareholders are advised that further to the cautionary announcement
dated 16 August 2005, Enaleni has entered into an agreement on 5
September 2005 for the acquisition of 100% of the ordinary shares in
and claims against FirstPharm from The Black Family Trust and The
Forman Trust (`the vendors`), for a purchase consideration of R32 000
000 (`the transaction`).
1.2 FirstPharm, Enaleni`s first acquisition since its successful listing
on 10 June 2005, is the registered owner of a number of branded
affordable, quality generic products and focuses on the sales and
distribution of branded generic pharmaceutical products. Enaleni
targets the fast growing affordable generic sector of the market.
FirstPharm was established 17 year ago in 1988 and has been owned and
managed by the current Chief Executive Officer (`CEO`), David Black
since its inception.
1.3 FirstPharm`s products target the following disease categories:
analgesics, cough and colds, infection control, upper and lower gastro
intestinals and antibiotics. In the past year FirstPharm has
increased the sales of its own established generic brands by more than
50%.
1.4 FirstPharm supplies its products to pharmaceutical wholesalers,
doctors, pharmacies, hospitals and government and earlier this year
received a Marketer of the Year Award from the Proudly South African
organisation. FirstPharm has a specialised sales force that promotes
its products to the medical profession.
2. Terms of the transaction
2.1 The purchase consideration in terms of the transaction is R32 000 000
and will be settled as follows to the vendors:
- R10 000 000 in cash;
- a deferred payment, 2 years after the issue date, either in 4 000
000 Enaleni ordinary shares at an issue price of 200 cents per
share or in cash; and
- the balance of R14 000 000 by way of the issue of vendor shares
(`vendor shares`), to be placed primarily with Black Economic
Empowerment (`BEE`) parties. Enaleni can elect to pay the
balance in cash, or partly in cash and by the issue and placing
of vendor shares.
2.2 The effective date of the transaction is 1 September 2005.
2.3 In terms of the transaction, FirstPharm`s management team remains
unchanged with Dave Black as CEO, Ira Fosteras (Managing Director),
Gary Smith (Financial Manager), Vish Narrandes (Distribution Manager)
and Althea Williams (Marketing Manager and current Proudly South
African Employee of the Year).
2.4 The transaction is subject to inter alia, the successful placing of
the vendor shares on or before 30 September 2005.
3. Rationale for the acquisition
3.1 The rationale for the FirstPharm transaction is inter alia as follows:
- the owned branded generic product registrations will grow and
strengthen Enaleni`s pharmaceutical platform and open new local
and international opportunities and markets for the group;
- provide affordable medicines in line with the soon to be
announced Health Charter through many opportunities such as
licence agreements and joint ventures and to assist FirstPharm to
comply with BEE;
- the relevant pharmaceutical products produced by the Enaleni
group companies will now be marketed and distributed through the
FirstPharm business;
- FirstPharm will benefit from Enaleni`s world class new product
development, regulatory and manufacturing capability, enabling it
to launch new products into the market in due course;
- strengthen the Government tender platform of the group;
- take advantage of the synergies between Enaleni and FirstPharm
selling into the respective customer bases;
- improved economies of scale, costs savings and purchasing power.
4. Financial effects of the transaction
4.1 The unaudited pro forma financial effects are provided for illustrative
purposes only to provide information about how the acquisition of
FirstPharm and the issue of Enaleni ordinary shares may have impacted on
Enaleni`s results and financial position. Due to the nature of the
unaudited pro forma financial information, it may not give a fair
presentation of the group`s results and financial position after the
acquisition of FirstPharm and the issue of Enaleni ordinary shares. The
unaudited pro forma financial effects are based on the unaudited pro forma
financial information after the capital raising and private placing as
disclosed in the prospectus dated 26 May 2005 to make the comparison more
meaningful. The audited 31 December 2004 financial effects have been
included in terms of the JSE Listings Requirements. The directors of
Enaleni are responsible for the preparation of the unaudited pro forma
financial effects.
Audited 31 Unaudited Pro Forma %
December pro forma unaudited Change
2004 after the after the
capital FirstPharm
raising and transaction
private 31 December
placing 31 2004
December
2004
Earnings per share 7.0 4.4 5.5 25.0
(cents)
Headline earnings per 7.0 4.4 5.5 25.0
share (cents)
Net asset value per 10.5 32.5 42.2 29.8
share (cents)
Net tangible asset (6.0) 25.6 14.1 (44.9)
value per share (cents)
Shares in issue (000) 47 770 113 545 120 545 6.2
(3)
Notes:
(1) The unaudited pro forma financial effects on the results were prepared
on the basis that the acquisition of FirstPharm and the issue of
Enaleni ordinary shares were completed on 1 January 2004.
(2) The unaudited pro forma financial effects on the financial positions
were prepared on the basis that the acquisition of FirstPharm and the
issue of Enaleni ordinary shares were completed on 31 December 2004.
(3) Assumed that the balance of the purchase consideration of R14 000 000
was settled by Enaleni by the issue and placing of vendor shares at
200 cents, which price is currently a premium to the 30 day weighted
average price of Enaleni securities. The vendor placing will comply
with the JSE Listings Requirements 5.62(b) at the date of the placing.
(4) Goodwill of approximately R26 million will arise on the acquisition.
5. Further announcement
Shareholders will be notified once the transaction becomes unconditional.
6. Further cautionary announcement
Shareholders are advised that Enaleni has entered into new negotiations
unrelated to the above transaction, which if successfully concluded may
have a material effect on the price of the company`s securities.
Accordingly, shareholders are advised to exercise caution when dealing in
the company`s securities until a full announcement is made.
Designated Adviser
Exchange Sponsors
Attorneys
Deneys Reitz Inc
Johannesburg
6 September 2005
Date: 06/09/2005 11:09:01 AM
Produced by the JSE SENS Department
