| Thu 21 Oct 2004, 11:06 | | DISPOSAL OF NORHAM AND DEWHURST FRUIT FARMS |
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WB HOLDINGS - DISPOSAL OF NORHAM AND DEWHURST FRUIT FARMS AND FURTHER CAUTIONARY
ANNOUNCEMENT
WB HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1988/000570/06)
JSE code: WBH ISIN: ZAE000007902
(`WB Holdings` or `the company`)
DISPOSAL OF NORHAM AND DEWHURST FRUIT FARMS AND FURTHER CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the cautionary announcements dated 23 July and 2 September and
20 September 2004, shareholders are advised that WB Holdings has, through
its property holding subsidiary, Glaser Farms Holdings (Proprietary)
Limited and its farming subsidiary, Theewaterskloof Holdings (Proprietary)
Limited, entered into agreements for the disposal of its Norham and
Dewhurst fruit farms (`the properties`) to Kaapschon Boerdery 35
(Proprietary) Limited (`the purchaser`)(`the disposal`). The disposal is
subject to certain conditions precedent and constitutes a category 1
transaction in terms of the Listings Requirements of the JSE Securities
Exchange South Africa and accordingly approval thereof by WB Holdings
shareholders (`shareholders`) in general meeting is required.
2. Rationale for the disposal
The board of directors of the company have taken a strategic decision to
sell two of its five farms. This represents 20% of the company`s total
orchards. The decision to enter into the disposal agreement was prompted by
favourable demand for land in the Elgin area. It enables the company to
reduce debt and fast-track the development of the greater potential of its
remaining farms. The disposal will result in the elimination of non-
profitable orchards, significant cost cutting and a restructuring of
equipment, which may result in a return to profitability even at current
exchange rates.
3. Particulars of the disposal
3.1 Terms of the disposal
Subject to the fulfilment of the conditions precedent detailed in
paragraph 2.2 below, WB Holdings will, with effect from the date of
transfer of the properties into the name of the purchaser, dispose of
the properties and the farming business conducted thereon as a going
concern and voetstoots to the purchaser for a disposal consideration
of R13 300 000 which is to be settled as follows:-
3.1.1 An amount of R8 000 000 will be paid in cash on date of
registration of the transfer of the properties;
3.1.2 Payment of the balance of R5 300 000 will be secured by
means of a second mortgage bond of R8 million over the 2
farms, as well as various guarantees by the purchaser and
will be effected in four equal annual instalments of R1 325
000 each on the 30th September 2005, 2006, 2007 and 2008.
Interest will be payable monthly in arrears on the
outstanding balance at the prime overdraft rate from time to
time of Nedbank Limited, calculated from the date of
transfer of the properties until the date of final
settlement of the outstanding amount.
3.2 Conditions precedent to the disposal
The disposal is subject to the following outstanding conditions
precedent:
3.2.1 Approval of the disposal by shareholders at a general
meeting; and
3.2.2 Registration of a second mortgage bond over the properties
in favour of the company to secure payment of the amount
referred to in 3.1.2.
3.3 Application of the proceeds of the disposal
The disposal consideration will be utilised to reduce the long term
borrowings of the company.
3.4 Financial effects of the disposal
The following table and accompanying notes set out the unaudited pro
forma financial effects of the disposal on the earnings, headline
earnings, net tangible asset value and net asset value per share of
the company based on the published audited results for the year ended
30 June 2004. The table has been prepared for illustrative purposes
only to provide information on how the disposal may have effected the
financial information presented and, because of its nature, may not
give a true reflection of the effect of the disposal.
Before(1) After Change
(cents) (cents) %
Earnings per share(2) -49,0 -50,3 -2,7%
Headline earnings per -30,3 8,8 129,0%
share(2)
Net asset value(3) 438 365 -16,7%
Net tangible asset 438 365 -16,7%
value(3)
Weighted number shares in 9 400 000 9 400 000 0%
issue (`000)
Number of shares in issue 9 400 000 9 400 000 0%
(`000)
Notes:
1. Based on the published audited results for the year ended 30 June
2004.
2. Based on the assumptions that the disposal was concluded on 1
July 2003 and the disposal consideration applied to reduce
borrowings; and an after-tax interest rate of 8,75% on R13 300
000 was applicable throughout the year. The difference between
earnings per share and headline earnings per share is the loss on
sale of the assets of 5.56 million rand
3. Based on the assumption that the disposal was concluded on 30
June 2004.
3.5 Directors` opinion
The directors of the company have considered the terms and conditions
of the disposal agreement and are of the opinion that they are
beneficial to the company and shareholders and unanimously recommend
that shareholders vote in favour of the resolutions to implement the
disposal at the general meeting.
The directors intend to vote in favour of the resolutions necessary to
implement the disposal in respect of the shares beneficially owned by
them or under their control.
4. General meeting and documentation
A circular containing full details of the disposal and convening a general
meeting of shareholders to approve the disposal will be posted to
shareholders in due course.
5. Further cautionary announcement
The company intends to dispose of its Sonop fruit farm, representing
approximately 11% of its total orchards. Shareholders are therefore
advised to continue to exercise caution when dealing in their WB Holdings
shares until a further announcement is made in this regard.
Paarl
21 October 2004
Corporate Advisor and Sponsor
Sasfin Corporate Finance
A division of Sasfin Bank Limited
