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CSL
CSL
Consol - Acquisition of the minority shareholding in CSG
CONSOL LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1946/021828/06
Share code: CSL
ISIN: ZAE000063251
("Consol")
ACQUISITION OF THE MINORITY SHAREHOLDING IN CONSOL SPECIALITY GLASS
(PROPRIETARY) LIMITED
INTRODUCTION
Consol has on 31 January 2006 entered into an agreement effective from 1 July
2005, for the purchase of the 26.6% minority shareholding in its subsidiary,
Consol Speciality Glass (Proprietary) Limited ("CSG") from Speciality Glass
Holdings (Proprietary) Limited ("SGH") as well as SGH"s claim on loan account
against CSG of R1.6 million ("the acquisition").
The minority shareholding will be acquired cum the right to receive a dividend
of R3.4 million. The purchase consideration of R71.2 million will be settled in
cash.
RATIONALE
As disclosed to shareholders in Consol"s pre-listing statement dated Friday, 14
January 2005, a shareholders" agreement existed between Consol and SGH in
respect of the minority shareholding in CSG, in terms of which SGH had the right
to require the minority shareholding to be redeemed for a consideration to be
determined using a specified formula. Such right could first be exercised as at
1 July 2006 based upon the earnings of CSG for the prior three financial years.
Consol"s management wishes to maximise the synergistic opportunities between CSG
and Consol"s glass division, and has thus agreed to accelerate the process by
the acquisition of the minority shareholding. The Competition Commission issued
an unconditional approval of the acquisition on 25 January 2006.
CSG is a flexible, highly focused business concentrating on providing innovative
and distinctive glass packaging solutions to niche markets. Its products
comprise a wide range of containers and tableware which are characterised by
colour and shape differentiation, niche coating and labelling needs, all
requiring significantly shorter production cycles than bulk glass packaging
containers.
FINANCIAL EFFECTS
The acquisition, while earnings enhancing, does not have a significant effect on
the earnings and net assets of Consol. Disclosure of the financial effects of
the acquisition is therefore not required in terms of the Listings Requirements
of the JSE Limited.
RELATED PARTY TRANSACTION
Four of CSG"s directors, Robert John Blackie, Stephen Sydney Robson, Keith
Gordon Ayres and Jacobus Petrus Johannes Taylor, are also shareholders of SGH.
Accordingly, the acquisition is considered to be a small related party
transaction in terms of the Listings Requirements of the JSE Limited as Consol
is effectively transacting with directors of a subsidiary.
OPINION OF INDEPENDENT EXPERT
KPMG Services (Proprietary) Limited has been appointed to advise the board of
directors of Consol on whether the terms and conditions of the acquisition are
fair and reasonable to Consol shareholders. Their report, which is available for
inspection at Consol House, Osborn Road, Wadeville, Johannesburg until 28
February 2006, states that the application of the formula per the shareholders
agreement and related discounting, to take into account the early acquisition,
is fair and reasonable to the shareholders of Consol.
Wadeville
31 January 2006
Investment bank and sponsor
The Standard Bank of South Africa Limited
Legal advisor
Taback and Associates (Proprietary) Limited
Independent expert
KPMG Services (Proprietary) Limited
Date: 01/02/2006 12:00:08 PM Produced by the JSE SENS Department
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