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GDF
GDF
Gold Reef - Various corporate actions concluded and withdrawal of cautionary
GOLD REEF CASINO RESORTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1989/002108/06)
(Share code GDF & ISIN: ZAE000028338)
("Gold Reef")
ANNOUNCEMENT REGARDING VARIOUS CORPORATE ACTIONS CONCLUDED BY GOLD REEF AND
WITHDRAWAL OF CAUTIONARY
1. INTRODUCTION
Further to the cautionary announcement issued by Gold Reef on 14
December 2005, shareholders are advised that Gold Reef has concluded the
following corporate actions:
1.1 the restructure and refinancing of Akani Leisure Investments
(Proprietary) Limited ("ALI") ("ALI transaction"), the Black Economic
Empowerment ("BEE") partner of Gold Reef in Akani Egoli (Proprietary) Limited
("Akani Egoli");
1.2 a transaction with Casinos Austria International Holding GmbH ("Casinos
Austria") whereby Gold Reef acquired Casinos Austria"s right to a royalty of
0.375% of the gross gaming revenues of all Gold Reef"s casino operations
("Casinos Austria transaction");
1.3 the acquisition of an additional 31.4% interest in Garden Route Casino
(Proprietary) Limited ("Garden Route") ("Garden Route transaction");
1.4 the acquisition of an additional 62.5% interest in Goldfields Casino and
Entertainment Centre (Proprietary) Limited ("Goldfields") ("Goldfields
transaction"); and
1.5 the acquisition of an additional 6.0% interest in West Coast Leisure
(Proprietary) Limited ("West Coast Leisure") ("Mykonos transaction").
2. RATIONALE FOR THE CORPORATE ACTIONS
The corporate actions are in line with Gold Reef"s objective of
consolidating its gaming platform by increasing its exposure to its existing
operations. Gold Reef is of the view that these corporate actions will create
long-term financial benefits for its shareholders.
It is Gold Reef"s intention to increase the BEE beneficial shareholding
and/or economic interest in all of its operations to a minimum of 25.01%, thus
satisfying an important component of the Code of Good Practice issued by the
Department of Trade and Industry on broad-based BEE and complying with the
Gaming Boards" recommendations on BEE. In certain of the corporate actions
Gold Reef facilitates its BEE partners increasing their beneficial
shareholding and/or economic interest.
3. ALI TRANSACTION
3.1 Nature of business of ALI
ALI holds a direct interest of 50.0% in the ordinary share capital and
an economic interest of 15.0% in Akani Egoli which operates the Gold Reef City
Casino and Theme Park.
Gold Reef holds a direct interest of 50.0% in the ordinary share capital
and an economic interest of 83.9% in Akani Egoli.
3.2 Restructuring of ALI
3.2.1 The shareholding of ALI is in the process of being restructured which
will result in:
ALI redeeming the participating preference shares issued to, inter alia,
Gold Reef at a premium of approximately R408.4 million;
Gold Reef utilising the cash proceeds from the redemption of the
participating preference shares to subscribe for 49.97% of the ordinary share
capital in ALI for R445.5 million. The balance of R37.1 million will be funded
from Gold Reef"s available cash resources;
Gold Reef disposing of its 50.0% interest in Newshelf 698 (Proprietary)
Limited ("Newshelf 698"), a shareholder in ALI, to an ALI BEE shareholder for
R43.3 million which will be funded by way of a subscription for cumulative
redeemable preference shares in that ALI BEE shareholder by Gold Reef; and
Gold Reef subscribing for cumulative redeemable preference shares in
certain of the BEE shareholders of ALI, for R51.1 million (excluding the
preference shares referred in the previous item), so as to facilitate and fund
the acquisition of additional ALI shares by these ALI BEE shareholders.
3.2.2 The effective date of the ALI transaction is 1 January 2006.
3.2.3 The ALI transaction is conditional upon, inter alia, all regulatory and
Government approvals, including approval from the Gauteng Gambling Board.
3.3 Rationale for the ALI transaction
ALI has elected to redeem the participating preference shares issued to,
inter alia, Gold Reef. This has the effect of reducing Gold Reef"s economic
interest in Akani Egoli to 50.0%. In order to fund this redemption Gold Reef
has acquired a 49.97% direct interest in the ordinary share capital of ALI,
thereby entrenching a 74.99% beneficial shareholding by Gold Reef in Akani
Egoli and securing a 25.01% BEE beneficial shareholding in Akani Egoli.
3.4 Categorisation of the ALI transaction
The ALI transaction is a Category 3 transaction as defined in Section
9.5(a) of the Listings Requirements of JSE Limited ("the JSE").
4. CASINOS AUSTRIA TRANSACTION
4.1 Background
4.1.1 Casinos Austria holds 29.2% in the ordinary share capital in Gold Reef.
4.1.2 Casinos Austria is entitled to a royalty of 0.375% of the gross gaming
revenues of all Gold Reef"s casino operations ("royalty").
4.2 Details of the Casinos Austria transaction
4.2.1 Gold Reef has acquired Casinos Austria"s right to the royalty for R42.4
million.
4.2.2 The Casinos Austria transaction was funded from Gold Reef"s available
cash resources.
4.2.3 The effective date of the Casinos Austria transaction is 31 December
2005. All conditions precedent have been fulfilled.
4.3 Rationale for the Casinos Austria transaction
The Casinos Austria transaction eliminates any potential conflict of
interest between Gold Reef and Casinos Austria and is expected to be earnings
enhancing in the medium to long term.
4.4 Categorisation of the Casinos Austria transaction
The Casinos Austria transaction is a "small related party transaction"
in terms of paragraph 10.7 of the Listings Requirements of the JSE due to
Casinos Austria being a significant shareholder in Gold Reef.
Gold Reef appointed Grant Thornton Corporate Finance (Proprietary)
Limited ("Grant Thornton") to review the Casinos Austria transaction and to
report as to the fairness and reasonableness of the Casinos Austria
transaction to the Gold Reef shareholders. Grant Thornton is of the opinion
that the terms and conditions are fair and reasonable to Gold Reef
shareholders. Grant Thorton"s opinion is available for inspection, during
office hours, at the registered office of Gold Reef, Gold Reef City, Gate 4,
Northern Parkway, Ormonde, Johannesburg, 2157 for a period of 28 days from the
date of this announcement.
5. GARDEN ROUTE TRANSACTION
5.1 Nature of business of Garden Route
Garden Route owns and operates the Garden Route Casino located in Mossel
Bay in the Western Cape.
5.2 Details of the Garden Route transaction
5.2.1 Prior to the Garden Route transaction the Garden Route"s shareholders
consisted of:
Gold Reef, holding 42.5% of the ordinary share capital;
Inkonka Investments (Proprietary) Limited ("Inkonka Investments"),
holding 42.5% of the ordinary share capital; and
Widgetrade 205 (Proprietary) Limited ("Widgetrade"), the BEE
shareholder, holding 15.0% of the ordinary share capital.
5.2.2 Gold Reef will acquire 100% of the ordinary share capital in Inkonka
Investments for R156.0 million plus the shareholders loans of approximately
R25.1 million. The effect of the Garden Route transaction is that Gold Reef
will have a beneficial shareholding of 85.0% in Garden Route.
Widgetrade has indicated its intention to participate in the Garden
Route transaction at the same purchase consideration payable by Gold Reef and
in the ratio of its pro rata shareholding in Garden Route, subject to
Widgetrade being able to secure the necessary funding by 28 February 2006, the
date on which the Garden Route transaction purchase consideration is to be
settled by Gold Reef. If this happens Gold Reef will sell 26.1% of Inkonka
Investments to Widgetrade for R40.7 million plus their proportionate share of
the shareholders loans. This will result in Gold Reef holding a 73.9% interest
in Inkonka Investments and having a beneficial shareholding of 73.9% in Garden
Route.
5.2.3 The effective date of the Garden Route transaction is 1 January 2006.
5.2.4 The Garden Route transaction will be funded from Gold Reef"s available
cash resources.
5.2.5 The Garden Route transaction is conditional upon the approval of the
Western Cape Gambling and Racing Board.
5.3 Rationale for the Garden Route transaction
The Garden Route transaction increases Gold Reef"s beneficial
shareholding in Garden Route from 42.5% to 73.9% and is in line with Gold
Reef"s objective of consolidating its gaming platform by increasing its
exposure to its existing operations. In addition, the Garden Route transaction
facilitates Widgetrade increasing its beneficial shareholding in Garden Route
to 26.1%, thus improving the BEE beneficial shareholding in Garden Route.
5.4 Categorisation of the Garden Route transaction
The Garden Route transaction is a Category 3 transaction as defined in
Section 9.5(a) of the Listings Requirements of the JSE.
6. GOLDFIELDS TRANSACTION
6.1 Nature of business of Goldfields
Goldfields owns and operates the Goldfields Casino located in Welkom in
the Free State.
6.2 Details of the Goldfields transacton
6.2.1 Prior to the Goldfields transaction, the Goldfields" shareholders
consisted of:
Gold Reef, holding 10.0% of the ordinary share capital and an economic
interest of 14.7%;
Tanglepark Trading (Proprietary) Limited ("Tanglepark"), holding 50.0%
of the ordinary share capital and an economic interest of 73.3%; and
Akani Leisure Goldfields Investments (Proprietary) Limited ("ALGI"), the
BEE shareholder, holding 40.0% of the ordinary share capital and an economic
interest of 12.0%.
6.2.2 Gold Reef has acquired 100% of Tanglepark which is conditional upon the
refinancing of ALGI.
The refinancing of ALGI will result in the following beneficial
shareholding:
Shareholder Shareholding Beneficial shareholding
% %
Gold Reef 12.4 12.4
Tanglepark 62.5 62.5
ALGI 25.1 25.1
The effect of the Goldfields transaction is that Gold Reef will have a
beneficial shareholding of 74.9% in Goldfields and ALGI will have a beneficial
shareholding of 25.1% in Goldfields.
6.2.3 The purchase consideration to be paid by Gold Reef to the shareholders
of Tanglepark is R136.5 million plus shareholders loans of approximately R3.1
million.
6.2.4 The effective date of the Goldfields transaction is 1 March 2006.
6.2.5 The Goldfields transaction will be funded from Gold Reef"s available
cash resources.
6.2.6 The Goldfields transaction is conditional upon, inter alia, the
fulfillment of the following outstanding conditions precedent:
the refinancing of ALGI;
all regulatory and Government approvals, including the approval from the
Free State Gambling and Racing Board; and
Goldfields entering into an agreement to acquire the portion of the
property currently occupied by the Goldfields Casino on or before 28 February
2006.
6.3 Rationale for the Goldfields transaction
The Goldfields transaction increases Gold Reef"s beneficial shareholding
in Goldfields from 14.7% to 74.9% and is in line with Gold Reef"s objective of
consolidating its gaming platform by increasing its exposure to its existing
operations. In addition, the Goldfields transaction facilitates ALGI
increasing its beneficial shareholding in Goldfields to 25.1%, thus improving
the BEE beneficial shareholding in Goldfields.
6.4 Categorisation of the Goldfields transaction
The Goldfields transaction is not a "category" transaction in terms of
Section 9.5(a) of the Listings Requirements of the JSE. This announcement is
made in order to provide information to shareholders regarding the Goldfields
transaction.
7. MYKONOS TRANSACTION
7.1 Nature of business of West Coast Leisure
West Coast Leisure owns and operates Casino Mykonos which is located in
Langebaan in the Western Cape.
7.2 Details of the Mykonos transaction
7.2.1 Prior to the Mykonos transaction the West Coast Leisure"s shareholders
consisted of:
Gold Reef, holding 54.3% of the ordinary share capital;
Club Mykonos Langebaan Limited ("CML"), holding 26.7% of the ordinary
share capital;
Reygrande Investment Holdings (Proprietary) Limited, the BEE
shareholder, holding 10.0% of the ordinary share capital; and
Flexcor Thirteen (Proprietary) Limited, Merla Management Consultants
(Proprietary) Limited, Annford Investments (Proprietary) Limited and Mark
Edwin Osner (collectively, "the Sellers"), holding 9.0% of the ordinary share
capital.
7.2.2 Gold Reef has acquired a 6.0% interest in West Coast Leisure from the
Sellers for approximately R7.8 million, with CML acquiring the remaining 3%.
7.2.3 The Mykonos transaction was funded from Gold Reef"s available cash
resources and all conditions precedent have been fulfilled.
7.2.4 The effective date of the Mykonos transaction is 1 January 2006.
7.3 Rationale for the Mykonos transaction
The Mykonos transaction increases Gold Reef"s beneficial shareholding in
West Coast Leisure from 54.3% to 60.3% and is in line with Gold Reef"s
objective of consolidating its gaming platform by increasing its exposure to
its existing operations.
7.4 Categorisation of the Mykonos transaction
The Mykonos transaction is not a "category" transaction in terms of
Section 9.5(a) of the Listings Requirements of the JSE. This announcement is
made in order to provide information to shareholders regarding the Mykonos
transaction.
8. INDICATIVE FINANCIAL EFFECTS
These indicative financial effects are given for illustrative purposes
only and, because of their pro forma nature, may not give a fair reflection of
Gold Reef"s financial results and position after the corporate actions. These
indicative financial effects are the responsibility of the Gold Reef
directors.
ALI
transaction
Before(1) After(2)(3)(4) %
Earnings per share (cents) 47.2 260.9 452.8
Headline earnings per share
(cents) 45.2 44.7 (1.1)
Net asset value per share
(cents) 480.4 694.3 44.5
Tangible net asset value
per share (cents) 433.0 411.8 (4.9)
Goldfields
transaction
Before(1) After(2) (3) (6) %
Earnings per share (cents) 47.2 51.8 9.7
Headline earnings per share
(cents) 45.2 46.2 2.2
Net asset value per share
(cents) 480.4 486.2 1.2
Tangible net asset value
per share (cents) 433.0 380.1 (12.2)
Casinos Austria
transaction
Before(1) After(2) (3) %
Earnings per share (cents) 47.2 46.9 (0.6)
Headline earnings per share
(cents) 45.2 44.9 (0.7)
Net asset value per share
(cents) 480.4 480.4 -
Tangible net asset value
per share (cents) 433.0 412.4 (4.8)
Mykonos
transaction
Before(1) After(2) (3) %
Earnings per share (cents) 47.2 47.3 0.2
Headline earnings per share
(cents) 45.2 45.3 0.2
Net asset value per share
(cents) 480.4 480.9 0.1
Tangible net asset value
per share (cents) 433.0 430.4 (0.6)
Garden Route
transaction
Before(1) After(2) (3) (5) %
Earnings per share (cents) 47.2 48.0 1.7
Headline earnings per share
(cents) 45.2 46.0 1.8
Net asset value per share
(cents) 480.4 511.2 6.4
Tangible net asset value
per share (cents) 433.0 386.6 (10.7)
Consolidated
Before(1) After(2)(3) %
Earnings per share (cents) 47.2 266.1 463.8
Headline earnings per share
(cents) 45.2 46.3 2.4
Net asset value per share
(cents) 480.4 731.6 52.3
Tangible net asset value
per share (cents) 433.0 289.4 (33.2)
1. Based on the published unaudited interim results of Gold Reef for the
six months ended 30 June 2005.
2. Based on the assumption that the transaction was effected on 1 January
2005 for income statement purposes and 30 June 2005 for balance sheet
purposes.
3. An adjustment has been made to take into account the after-tax interest
that would have been earned on the purchase consideration at average deposit
rates applicable to Gold Reef during the period 1 January 2005 to 30 June
2005.
4. The substantial increase in earnings per share is due to the premium on
the redemption of the participating preference share by ALI and the profit on
the sale of shares in Newshelf 698. These amounts are not taken into account
for the calculation of headline earnings per share.
5. The financial effects assume that Widgetrade has participated in the
Garden Route transaction as described in paragraph 5.2.2 above.
6. The effects of the acquisition of the property referred to in paragraph
6.2.6 above have not been accounted for as the terms and conditions of the
purchase agreement have not been finalised.
9. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are advised that caution is no longer required to be
exercised by shareholders when dealing in their Gold Reef securities.
Johannesburg
13 February 2006
Financial advisor and transaction sponsor
ABSA
Corporate and Merchant Bank
Corporate Finance
ABSA Bank Limited
Registration number 1986/004794/06
Legal advisors
Werksmans Incorporated
Reg. No. 1990/007215/21
Corporate law advisors and consultants
EDWARD NATHAN
Corporate Law advisers
Edward Nathan (Proprietary Limited)
Registration No. 2004/005665/07
Independent advisor
on the Casinos Austria transaction
Grant Thornton
Corporate Finance (Pty) Ltd
(Registration number 2000/002649/07)
Sponsor
Nedbank Capital
Date: 13/02/2006 01:13:26 PM Produced by the JSE SENS Department
