| Tue 7 Mar 2006, 14:08 | | ADC - Acquisition of Sindele and further cautionar |
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ACD
ACD
ADC - Acquisition of Sindele and further cautionary
Alliance Data Corporation Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 1997/013402/06)
Share Code: ACD
ISIN Code: ZAE000065165
("ADC" or "the company")
Acquisition of Sindele Mining Supplies (Pty) Limited ("Sindele");
1. Introduction
1.1 Shareholders are advised that, ADC has entered into an agreement for the
acquisition of 100% of the ordinary shares in Sindele from Lucas van der Merwe
("the vendor"), for a purchase consideration of R27 million ("the Sindele
transaction").
1.2. In accordance with ADC"s usual practice when acquiring successful
businesses, the management and team members of Sindele who were instrumental in
the past successes of Sindele will remain unchanged.
2. Background to Sindele
2.1 Sindele Mining Supplies" products and services are directed at clients that
operate within the precious metals mining industry. Clients include Angloplat,
Goldfields and Harmony. These markets are currently experiencing unprecedented
demand. Sindele has over 1 100 full-time employees.
2.2 Lukas van der Merwe, founder and director of Sindele, has 25 years mining
experience. He has financed most of the historic operations of Sindele and will
be appointed to the ADC board as an executive director as soon as all conditions
precedent has been fulfilled. Sindele is a preferred supplier of mining services
with significant contracts already in place. There is opportunity for vast
expansion and growth as a number of mining houses and groups have not yet been
approached.
2.3 Services offered include contract mining and the manufacturing, supply and
distribution of a full column grouting system and pumps. Sindele manufactures a
full column grouting system used primarily in gold and platinum mines to secure
roof bolts underground for roof support. Raw materials for the manufacturing
process are imported from Spain. The manufacturing process is patented and is
also a closely guarded secret. This product was developed in-house to be easily
transportable and useable within the mining environment.
2.4 Sindele holds three patent rights for the design of pumps used in the mining
industry, a significant competitive advantage as there are no alternatives in
the industry.
2.5 The business offers mining support and maintenance mainly directed at
platinum mines.
3. Terms of the Sindele transaction
3.1 The purchase consideration in terms of the Sindele transaction is 18 million
shares at R1,50 amounting to R27 million and will be settled as follows to the
Sindele vendor:
- the purchase consideration will be settled to the Sindele vendor by the
issuing of ADC ordinary shares at an issue price of 150 cents per share, being a
premium to the market price at the time that the Sindele transaction was agreed;
3.2 The key management and team members of Sindele will all become shareholders
in ADC subsequent to the transaction from the shares issued to the vendor;
3.3 The effective date of the transaction is 1 March 2006
3.4 In terms of the Sindele transaction, Sindele"s management team and all team
members remain unchanged.
3.5 The senior and key management will enter into written employment contracts
with ADC incorporating restraint of trade clauses based on their current
employment terms.
4. Rationale for the acquisitions
4.1 The rationale for the Sindele transaction is inter alia as follows:
- the acquisition of Sindele will immediately elevate the group to a combined
annual turnover of approximately R80 million expected in 2006;
- assist Sindele to comply with their BEE objectives;
- significantly strengthen the mining tender platform of the group, with
substantial opportunities for growth;
- take advantage of the synergies between ADC and Sindele through selling into
their respective customer bases;
5. Conditions precedent to the Sindele transaction
5.1 The Sindele transaction is subject inter alia to the following conditions
precedent:
- approval of the transaction by the shareholders of ADC in terms of the JSE
Listings Requirements;
- that key management enter into written employment contracts with ADC
(incorporating restraint of trade clauses);
- approval of the transaction by the Competition Commission and/or the
Competition Tribunal, as the case may be; and
- the successful completion of a due diligence.
6. Financial effects of the transactions
The financial effects of the Sindele transaction will only be announced after
the conclusion of the due diligence investigation. The due diligence will be
completed by no later than 8 March 2006 at which date a detail announcement of
the financial effects will be published, as the purchase consideration will be
confirmed.
7. Circular to shareholders
A circular to ADC shareholders containing details of the Sindele transaction and
incorporating a notice of general meeting of shareholders will, subject to
approval by the JSE, be mailed to shareholders within 28 days of this
announcement or within such longer period as the JSE may allow in the
circumstances.
In terms of the Listings Requirements of the JSE ("the Listings Requirements"),
the acquisition is viewed as a "reverse take-over" and consequently ADC is
required to prepare a Category 1 circular and listing particulars as though ADC
is a new applicant. As required by the Listings Requirements, ADC shareholders
are warned that it is uncertain, at this stage, whether or not the JSE will
allow ADC"s listing to continue following implementation of the acquisition.
8. Further cautionary announcement
The financial effects of the Sindele transaction will be announce after the
completion of the due diligence investigation, shareholders are advised that
caution is still required to be exercised by them when dealing in their
securities.
Warning: The listing of ordinary shares in the company is on ALTx. Investors
are advised of the risks of investing in a company listed on ALTx. Investors are
advised that the JSE does not guarantee the viability or the success of a
company listed on ALTx. In terms of the Listings Requirements, the company is
obliged to appoint and retain a Designated Adviser, which is required to, inter
alia, attend all board meetings held by the company to ensure that all the
Listings Requirements and applicable regulations are complied with, approve the
Financial Director of the company and guide the company in a competent,
professional and impartial manner. If the company fails to retain a Designated
Adviser, it must make arrangements to appoint a new Designated Adviser within 10
business days, failing which the company faces suspension of trading of its
securities. If a Designated Adviser is not appointed within 30 days of its
suspension, the company faces the termination of its listing without the
prospect of an appropriate offer to minority shareholders.
Designated Adviser and Corporate Adviser
Exchange Sponsors
Johannesburg
28 February 2005
Date: 07/03/2006 02:08:09 PM Produced by the JSE SENS Department
