| Mon 19 Dec 2005, 15:00 | | Schamin - Acquisition of the business of Benicon a |
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Schamin - Acquisition of the business of Benicon and withdrawal of cautionary
SCHARRIG MINING LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1992/001973/06)
Share Code: SCN & ISIN: ZAE000006474
("Schamin" or "the Company")
ACQUISITION OF THE BUSINESS OF BENICON EARTHWORKS AND MINING SERVICES (PTY) LTD
("BENICON") AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
INTRODUCTION
Further to the cautionary announcement published on SENS on 8 November 2005, the
directors of Schamin announce that they have concluded an agreement for the
purchase of the business of Benicon as a going concern "the acquisition").
INFORMATION ON BENICON
Benicon conducts the business of a contract miner, conducts earthmoving and
earthwork operations and is a trader in related earthmoving and mining equipment
and spares. Benicon has operated in the same market as Schamin since 1979 and
enjoys a solid reputation for service and commitment to clients. The sole
shareholder of Benicon is Nicolaas Jacobus van der Merwe ("Van der Merwe"). Van
der Merwe has agreed to sign a three year service and restraint of trade
agreement with Schamin.
RATIONALE FOR THE ACQUISITION
Schamin"s long-term strategy is to diversify its earnings base and to expand the
client base that it currently services. Schamin recognizes the abovementioned
strengths of Benicon and sees that this acquisition furthers the strategy of
Schamin to the mutual benefit of both businesses.
TERMS OF THE TRANSACTION
Schamin is acquiring the business of Benicon as a going concern. The purchase
consideration of R56,5 million is payable in cash of R26,5 million (which will
be funded from internal resources) and by the allotment of 6 000 000 (six
million) ordinary shares of 1 cent each in Schamin ("the shares") to Benicon.
The shares are issued at a price of 500 cents per share, which is at a 1%
premium to the Schamin share price at close of business on 21 September 2005,
being the day prior to the first cautionary announcement being published. The
effective date of the acquisition is 1 September 2005. Application will be made,
subject to certain suspensive conditions set out below being fulfilled, to the
JSE Limited ("JSE") for the issue and listing of the shares.
CONDITIONS PRECEDENT
The transaction is conditional upon the fulfillment of the following suspensive
conditions:
- the satisfactory completion of a due diligence investigation by Schamin by
no later than 25 January 2005;
- the cession and delegation by Benicon of their existing client contracts to
Schamin;
- competition authority approval; and
- approval by the JSE to the issue and listing of the shares.
FINANCIAL EFFECTS OF THE TRANSACTION
The table below sets out the pro forma financial effects of the acquisition on
Schamin as defined by the JSE ("pro forma financial effects") which have been
calculated based on Schamin"s reviewed interim financial results for the six
months ended 30 September 2005 and Benicon"s unaudited results for the six
months ended 30 September 2005 extracted from Benicon"s management accounts.
These pro forma financial results, which are the responsibility of the
directors, are presented for illustrative purposes only and, because of their
nature, may not fairly present the true financial effects of the acquisition on
the balance sheet and income statement of Schamin.
Before After Percentage
Acquisition Acquisition Change
Earnings per share (cents) 31,0 38,0 22,6
Headline EPS (cents) 31,0 38,0 22,6
Net asset value (cents) 212,4 224,4 5,7
Net tangible asset value (cents) 212,4 224,4 5,7
Number of shares in issue 137 430 895 143 430 895
Notes:
1. The information in the "before" column has been extracted from the interim
financial information of Schamin as at 30 September 2005.
2. The financial effects have been calculated on the assumption that the
acquisition was effective from 1 April 2005.
3. The funding cost of the acquisition was assumed to be 9,5%.
JSE CATEGORISATION OF THE TRANSACTION
The acquisition constitutes approximately 7,4% of Schamin"s current issued share
capital and is categorised as a Category 3 transaction by the JSE. Therefore
this announcement appears for information purposes only. The transaction is at
arm"s length and does not require shareholders approval or a circular to be sent
to shareholders. Shareholders will be informed via SENS on the fulfillment of
the suspensive conditions to the transaction.
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcement dated 8 November 2005
and are advised that as a result of this announcement the cautionary is now
withdrawn.
Boksburg
19 December 2005
Sponsor
Sasfin Capital
(a division of Sasfin Bank Limited)
Attorneys
Tabacks
Date: 19/12/2005 03:00:35 PM Produced by the JSE SENS Department
