| Fri 17 Feb 2006, 15:30 | | Kairos - Acquisition of remaining 50% interest in |
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KIR
KIR
Kairos - Acquisition of remaining 50% interest in Brokrew; and
Withdrawal Of Cautionary Announcement
KAIROS INDUSTRIAL HOLDINGS LIMITED
Incorporated in the Republic of South Africa
Registration number 1987/002927/06
Share code: KIR & ISIN: ZAE000011284
("Kairos" or "the company")
ACQUISITION OF REMAINING 50% INTEREST IN BROKREW (PTY) LIMITED
AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Shareholders are referred to the cautionary announcement dated 24 January 2006.
In August 1997, Kairos Mining (Pty) Limited ("Kairos Mining"), a wholly-owned
subsidiary of Kairos, entered into a joint venture agreement ("the JV
agreement") with Krew Ventilation (Pty) Limited ("Krew" or "the seller") with
respect to the operation and administration of a joint venture company, Brokrew
(Pty) Limited ("Brokrew"), a company involved in the manufacture, repair, supply
and distribution of ventilation equipment to the mining and industrial sectors.
In terms of the JV agreement, at any time after three years calculated from 1
September 1997, either Kairos Mining or Krew may call on the other Brokrew
shareholder to:
* purchase its shares in and claims against Brokrew; or
* sell to it, all its shares in and claims against Brokrew.
On 18 January 2006, Kairos Mining notified Krew in writing ("the notification")
of its desire to purchase Krew"s shares in and claims against Brokrew ("the
acquisition") for a cash consideration of R15 million ("the acquisition
consideration"). In terms of the JV agreement, Krew responded in writing to the
aforementioned notification, indicating its acceptance of Kairos Mining"s
intention, details of which are set out below.
2. Terms of the acquisition
The JV agreement specifies that the acquisition consideration shall be paid in
cash to the seller within 60 days of Krew indicating its acceptance of the
notification, being by 20 April 2006. Notwithstanding this provision in the JV
agreement, as the acquisition requires notification in terms of the Competitions
Act 89 of 1998 from the Competition Authorities, payment of the acquisition
consideration will only take place once approval from the relevant Competition
Authorities has been obtained.
3. Rationale for the acquisition
Acquiring a controlling shareholder"s interest in Brokrew from joint venture
partner Krew will allow Kairos to impose its strategic initiatives on the
business. It will also allow Kairos to attribute its empowerment profile to
Brokrew, thereby enhancing ongoing BEE initiatives within the group.
4.Financial effects of the acquisition
Set out below are the pro forma financial effects of the acquisition based on
Kairos" published unaudited interim results for the six months ended 31 August
2005. The pro forma financial effects have been prepared for illustrative
purposes only to provide information on how the acquisition may have impacted
the results and financial position of Kairos. Because of their nature, the pro
forma financial effects may not give a fair reflection of Kairos" financial
position after the acquisition or the effect on future earnings. The pro forma
financial effects are the responsibility of the company"s directors.
Before the After the Change
Cents acquisition1 acquisition (%)
Earnings per share 1,29 1,842 42,64
Headline earnings per share 1,04 1,592 52,88
Net asset value per share 19,00 20,753 9,21
Net tangible asset value per 17,85 19,103 7,00
share
Notes:
1. The figures in the "Before the acquisition" column have been extracted
from the published unaudited interim results for the six months ended 31
August 2005.
2. The figures in the "After the acquisition" column, in respect of
earnings and headline earnings per share, have been based on the following
assumptions:
a. the acquisition was effective 1 March 2005; and
b. the R15 million loan from Nedbank Limited to fund the acquisition
attracted interest at prime.
3. The figures in the "After the acquisition" column, in respect of net
asset value and net tangible asset value per share have been based on the
following assumptions:
a. the acquisition was effective 31 August 2005;
b. the acquisition was funded by a R15 million loan from Nedbank Limited.
5. Withdrawal of cautionary announcement
As the details of the negotiations referred to in the cautionary announcement
dated 24 January 2006 have been disclosed, shareholders are no longer required
to exercise caution when dealing in the company"s shares.
Pretoria
17 February 2006
Transaction advisor and sponsor
Bridge Capital
Legal advisors
Tugendhaft Wapnick Banchetti and Partners
Date: 17/02/2006 03:30:04 PM Produced by the JSE SENS Department
