| Thu 13 Oct 2005, 13:58 | | Yorkcor - Acquisition and withdrawal of cautionary |
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Yorkcor - Acquisition and withdrawal of cautionary announcement
The York Timber Organisation Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1916/004890/06)
Share code: YRK & ISIN code: ZAE000008108
("Yorkcor" or "the company")
Acquisition of the business of Taurus Estates (Pty) Limited and withdrawal
of cautionary announcement
1. Introduction and terms
The board of Yorkcor is pleased to announce that Yorkcor, through its
subsidiary, Madiba Forest Products (Pty) Limited ("Madiba"), has
reached agreement with Taurus Estates (Pty) Limited ("the vendor")
for the acquisition of the vendor"s entire business as a going
concern ("the business") for a consideration of R17 million ("the
consideration") (collectively, "the acquisition"). The effective
date of the acquisition is the date at which the property forming
part of the business is transferred into the name of Madiba, which
is expected to be in early-2006.
The consideration will be settled by means of:
- an amount of R625 000 payable by way of the delivery of 50 000
Yorkcor ordinary shares at R12,50 each on the effective date ("the
share settlement");
- an amount of R8 187 500 payable in cash on the effective date ("the
initial cash payment"); and
- an amount of R8 187 500 payable in cash in four equal annual
instalments of R2 046 875, plus interest calculated in arrears on
the outstanding balance at 200 basis points below Standard Bank"s
prime rate, commencing on the first anniversary of the effective
date ("the vendor loan").
2. Description of the business and rationale for the acquisition
The business is situated near Barberton in Mpumalanga and comprises soft and
hardwood plantations on five adjacent properties, a third of which
are mature and ready for harvesting, as well as silvicultural
operations, beneficiation of sawlogs, and timber trading and
processing, including plant and equipment. The business is being
acquired free of liabilities and claims.
The board previously communicated to shareholders Yorkcor"s four-pronged
growth strategy, namely the securing of log supply lines, pursuing
selected acquisitions, realising selected trading opportunities and
promoting its involvement with Black Economic Empowerment ("BEE").
The acquisition is therefore viewed as strategically important by
the board in as much as it:
- allows Yorkcor control over additional sources of sawlog supply;
- will facilitate the continued expansion of the timber processing of
the Madiba group within the aegis of Yorkcor; and
- has been identified as an appropriate opportunity to expand the
company"s BEE credentials at an operational level by inviting broad
based BEE entities to participate directly in the prospects of the
business.
3. Financial effects
The table below sets out, for illustrative purposes only, the pro forma
financial effects of the acquisition on the unaudited financial
statements of Yorkcor for the six months ended 30 June 2005. The
pro forma earnings figures illustrate the possible financial effects
if the transaction had been undertaken on 1 January 2005 that is for
a period of six months, whereas the pro forma net asset value
figures illustrate the possible financial effects if the transaction
was effected on 30 June 2005. Due to their nature, the pro forma
financial effects may not give a fair reflection of Yorkcor after
the acquisition.
Before the After the % change
acquisition - acquisition -
Six months Pro forma
Ended six months
30 June 2005
Earnings (cents per share) 73.0 76.1 (1) +4.2%
Headline earnings (cents per share) 72.7 75.8 (1) +4.3%
Net asset value and net tangible 777.3 779.4 (2) +0.3%
asset value (cents per share)
Average and weighted average 11 040 497 11 090 497 +0.5%
number of shares in issue (3)
Notes and assumptions:
1. Pro forma earnings and headline earnings incorporate the unaudited
income statement of the vendor for the 12 months ended 28 February
2005, expressed for a six month period and after taking into account
the following adjustments:
- management"s assessment of the operating costs of the business
within the Yorkcor group;
- an interest rate on call deposits of 6.2% and a bond interest rate
of 8.5%; and
- a company tax rate of 29%.
2. Pro forma net asset value and net tangible asset value incorporate
the consideration, to be funded by a combination of equity, debt
(for the first R5 million of the initial cash payment), internal
cash resources (for the remainder of the initial cash payment) and
the vendor loan.
3. Assuming that the share settlement takes place by way of an issue of
new Yorkcor shares. Should the Purchaser elect to settle this
portion of the consideration by way of existing Yorkcor shares the
effect on the number of Yokcor shares in issue will be zero.
4. Conditions precedent
The acquisition is subject to conditions that are considered normal for a
transaction of this nature, of which the following remain
outstanding:
- copies of the title deeds under which the immovable property is held
being made available to Madiba before 31 October 2005;
- an undertaking and resolution by the trustees of the Andrew Landman
Trust, the sole shareholder of the vendor ("the Trust"), to vote in
favour of the acquisition;
- an undertaking and resolution by the vendor and the Trust that the
mortgage bond in favour of NCT Forestry Co-operative Limited have
been repaid and/or cancelled;
- the vendor indemnifying Madiba against any claims by employees
arising before the effective date; and
- the requisite regulatory compliance and approval.
5. Withdrawal of cautionary
Shareholders are referred to the cautionary announcements published on SENS
on 1 June, 25 July, 6 September and 15 September 2005 advising that
the company had entered into various discussions. The discussions
relating to a BEE transaction have been terminated. By virtue of
the conclusion of the acquisition on the terms referred to in this
announcement, caution is no longer required to be exercised by
shareholders when dealing in their securities.
13 October 2005
Pretoria
Sponsor:
Sasfin Corporate Finance,
A division of Sasfin Bank Ltd
Date: 13/10/2005 01:58:34 PM Produced by the JSE SENS Department
