| Fri 10 Mar 2006, 17:28 | | Adonis - Disposal of all assets; change in contro |
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ADO
ADO
Adonis - Disposal of all assets; change in control; intention to acquire new
assets; and withdrawal of cautionary announcement
Adonis Knitwear Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number: 1969/002908/06
Share code: ADO & ISIN: ZAE000000121
("Adonis" or "the company")
DISPOSAL OF ALL ASSETS; CHANGE IN CONTROL; INTENTION TO ACQUIRE NEW ASSETS; AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. DETAILS OF TRANSACTIONS
Shareholders are advised that Adonis entered into an agreement on 10 March 2006,
subject to certain conditions precedent, to dispose of all of its knitwear
assets and liabilities ("the Adonis business") for R3 262 500 (the equivalent of
90 cents per share) to Dream World Investments 363 (Proprietary) Limited, a
company controlled by its controlling shareholder, Mr Joseph Bencen ("Bencen"),
subject to Section 228 of the Companies Act, Act 61 of 1973, as amended ("the
Act") ("the disposal").
On behalf of Joseph Bencen Trust Company (Pty) Limited and Kajla Bencen Trust
Company (Pty) Limited and Bencen, Bencen has simultaneously entered into an
agreement, subject to certain conditions precedent, to dispose of 2 488 950
ordinary shares in Adonis, constituting 68,66% of the entire issued share
capital of the company, to Bevdev CC ("Bevdev") for a consideration of R2 240
055 (being the equivalent of 90 cents per share).
Upon approval of the disposal and acquisition of shares, Bevdev will hold 68,66%
of the issued share capital of the company. In terms of the South African
Securities Regulation Code on Take-overs and Mergers ("the Code"), this will
constitute a change of control of the company and an "affected transaction" in
terms of the Code obliging Bevdev to extend an offer to shareholders to acquire
their shares on similar terms.
These transactions are also subject to the requisite guarantees being provided
by the parties to the satisfaction of the Securities Regulation Panel.
Those minority shareholders, who do not accept the offer to be made to
minorities by Bevdev, will continue to hold their investment in Adonis.
As the disposal constitutes an affected transaction in terms of the Code and a
Category 1 and related party transaction in terms of the JSE Limited"s ("JSE")
Listings Requirements, Adonis shareholders, other than Bencen and his
associates, must approve the disposal at a general meeting of the company
convened for the purpose of approving the disposal ("the general meeting").
Shareholders holding approximately 42% of the 1 130 050 shares held by the
minority shareholders have given undertakings to vote in favour of the disposal
of the Adonis business.
Bevdev intends to maintain the listing of the company on the JSE and convert the
company to a property loan stock company.
Subsequent to the disposal and acquisition of shares and as it is the intention
of Bevdev to maintain the listing on the JSE, it is will be proposed, that
Adonis changes its name to SiZAfica Property Holdings Limited, restructure its
capital and commence acquiring a commercial property portfolio.
2. RATIONALE
Adonis has been listed for many years as a manufacturer and marketer of mens and
ladies knitwear products. For the past seven years, Adonis has performed poorly
with the aggregate of after tax profits and losses amounting to a loss of R910
700 (the equivalent of 25 cents per share) for the period. Turnover has
furthermore declined by 21,7% over the 2003 to 2005 financial years.
Adonis, along with the rest of the textile and clothing industries, has been
negatively affected by the influx of low cost imports.
As a result of the poor financial performance in recent years, Adonis has
required and will continue to require the ongoing funding support from its major
shareholder.
Having regard to these circumstances and considerations, the board of directors
of Adonis is of the opinion that it is no longer appropriate for Adonis to
conduct its business in a listed entity.
Accordingly, the conditional offer by Bevdev has enabled the major shareholder
to acquire the Adonis business at a price that is considered fair value to
shareholders. The disposal and the acquisition of shares also presents
shareholders with an opportunity to realise their investment in Adonis at a
premium of 20% to the weighted average price of 75 cents at which the shares of
the company have traded on the JSE from 1 January 2005 to 24 October 2005, the
last date prior to the cautionary announcement relating to the disposal.
Alternatively, minority shareholders will have the opportunity to retain their
interest in the restructured Adonis and participate in any benefit that may
result from the possible acquisition of new property assets as proposed by its
new controlling shareholder.
3. PARTICULARS OF THE DISPOSAL
3.1 Terms of the disposal
Adonis will, subject to the fulfilment of the conditions precedent set out
below, dispose of all its assets and liabilities to Bencen for a net aggregate
amount of R3 262 500. The disposal consideration will be paid in cash to Adonis.
3.2 Effective date
The effective date of the disposal will be 1 October 2005.
3.3 Suspensive Conditions
The disposal and distribution are subject to and conditional upon the following
conditions precedent:
3.3.1 approval of the disposal by the JSE, the SRP and other regulatory
authorities that may be required; and
3.3.2 approval of the disposal by Adonis shareholders, other than Bencen and his
associates, at the general meeting as required by section 228 of the Act and the
JSE Listings Requirements.
3.4 Warranties
The disposal agreement contains no warranties other than that the assets
concerned are owned and can be sold by Adonis, and that all the liabilities of
Adonis will be assumed by the new owner.
3.5 Related party
Bencen is a related party to Adonis. Consequently the disposal constitutes a
related party transaction in terms of the JSE Listings Requirements and requires
written confirmation from an independent professional expert acceptable to the
JSE as to whether the terms and conditions thereof are fair and reasonable to
the Adonis minority shareholders. The disposal further constitutes an affected
transaction in terms of the Code and requires an independent opinion thereon by
an appropriate external advisor in terms of Rule 3.1 of the Code. An independent
professional expert will be appointed to determine that the terms and conditions
of the disposal are fair and reasonable to Adonis minority shareholders. The
full text of the opinion will be included in the circular referred to in 5
below.
3.7 Financial effects of the disposal
The following table and accompanying notes are the responsibility of the
directors of the company and set out the unaudited pro forma financial effects
of the disposal on an Adonis shareholder. It has been prepared for illustrative
purposes only and because of its nature, may not fairly present the issuer"s
financial position, changes in equity, results of operations or cash flows or
give a fair reflection of the effect of the disposal on an Adonis shareholder.
Before After Change %
(Loss)/earnings per share (cents) (1.4) (1) 3.8 (3) 371.4
Headline (loss)/earnings per share
(cents) (1.4) (1) 3.8 (3) 371.4
Net asset value per share (cents) 252.2 (1) 90.0 (4) (64.3)
Net tangible asset value per share
(cents) 252.2 (1) 90.0 (4) (64.3)
Weighted average share price
(cents) 75.0 (2) 90.0 (4) 20.0
Number of shares in issue (`000) 3 625 3 625
Notes:
Based on the published audited results of Adonis for the year ended 30 September
2005.
Weighted average trading price of one Adonis share for the period from 1 January
2005 up to 24 October 2005, the last date prior to publication of the first
cautionary announcement relating to the transaction.
For purposes of calculating the earnings and headline earnings per share it was
assumed that:
- The disposal was effected on 1 October 2004;
- interest at an after tax rate of 4.26% per annum was earned on the available
cash amount of 90 cents for the 12 months ended 30 September 2005;
- A tax rate of 29% was applied.
The price per share at which the disposal has been made.
The pro forma financial effects calculations have been prepared in terms of
SAICO guidelines. In view of the entire Adonis business being disposed of for
cash, the application of IFRS going forward has no effect.
4. INTENTIONS OF THE NEW CONTROLLING SHAREHOLDER
Bevdev has entered into discussions with a property asset management company
("PropM") that is in the process of assembling a commercial property portfolio
comprising retail, office and industrial properties to the value of at least
R500 million. The intention of Bevdev is:
to convert the authorised and issued capital of Adonis to facilitate the issue
of linked units comprising one share linked to one debenture, the details of
which will be included in the circular to shareholders referred to below;
For Adonis to acquire this portfolio and apply for a transfer of listing to the
"Real Estate" sector of the JSE"s lists in due course;
To provide the shareholders of Adonis with the opportunity of participating in
this proposed venture.
Shareholders will be informed in due course of the progress being made by PropM
in assembling the portfolio and the terms and conditions of the proposed
acquisition by Adonis of this portfolio.
5. PROPOSED TIMING
It is anticipated that the circular and offer will be posted to shareholders in
accordance with the following timetable:
- Circular and notice of general meeting relating to the disposal to be posted
to shareholders on or about Friday, 14 April 2006
- Proposed Date of General Meeting, on or about Tuesday, 2 May 2006
- Offer to minority shareholders by Bevdev to be posted on or about Thursday, 20
April 2006
- Proposed Closing Date of Bevdev Offer, on or about Friday, 12 May 2006
Notes:
The above dates and times are subject to amendment. A further table of salient
dates and times will be announced on SENS and published in the press in due
course.
6. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Having regard to the details provided in this announcement, Adonis shareholders
are no longer required to exercise caution when dealing in their shares on the
JSE.
Johannesburg
10 March 2006
Corporate Advisor and Transaction Sponsor
Imara Corporate finance South Africa (Pty) Ltd
Reporting Accountants and Auditors
Horwath Leveton Boner
Legal advisors to The Company
Fluxmans
Legal Advisor to Bevdev
Psiax Inc
Sponsor
Exchange Sponsors (Pty) Ltd
Date: 10/03/2006 05:28:09 PM Produced by the JSE SENS Department
