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PSC
PSC
Pasdec - Disposal transactions carried out in terms of the company"s
restructuring plan
PASDEC RESOURCES SA LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1987/004942/06
Share code: PSC & ISIN: ZAE000023552
("Pasdec" or "the company")
DISPOSAL TRANSACTIONS CARRIED OUT IN TERMS OF THE COMPANY"S RESTRUCTURING PLAN
1. Background
1.1 Following previous cautionary announcements and as mentioned in the Pasdec
Annual Report for the year ended 31 December 2005 ("the Annual Report")
regarding the company and its subsidiaries" ("the group") disposal and
closure plan, the Board of Directors of Pasdec is pleased to announce that
the company and certain of its subsidiaries have entered into various
transactions ("the transactions"), the details of which are set out below.
1.2 The disposal and closure plan led the Board to resolve in December 2005 to
dispose of and/or close the electrical motor businesses in accordance with
a formalised plan, which entails a structured process of disposal of the
assets of the group on a piecemeal basis in accordance with the approved
business plan. Continued imports of electric motors by local users and
distributors placed tremendous pressure on the company to reduce local
manufacturing costs and selling prices to retain existing market share. The
current local manufacturing costs could not compete with low cost base
countries and subsidised imported electrical motors, exacerbated by the
continued strength of the Rand.
1.3 The introduction of a Black Economic Empowerment ("BEE") Partner in Pasdec
Automotive Technologies (Proprietary) Limited, pursuant to the transaction
stipulated in 2.1 below, will align the company with present charters, as
well as serve to enhance the strategic position of the company in the
automotive component sector. The Board of Directors of Pasdec is confident
that they have identified a well established BEE partner that will be able
to make substantial contributions to the future performance of the company.
1.4 In terms of the structured plan of the disposal of assets, the Directors
intend to settle all liabilities of the company, including retrenchment and
closure costs to be incurred. It is expected that these measures will
drastically improve the financial performance of Pasdec by utilising funds
generated from the transactions to settle liabilities and restore
profitability.
2. Disposals
2.1 Sale of equity interest in Pasdec Automotive Technologies (Proprietary)
Limited
2.1.1 The company has entered into sale of shares and claims agreements
("disposal agreements") to dispose of 67.4% of its holding in its
wholly-owned subsidiary, Pasdec Automotive Technologies (Proprietary)
Limited ("PAT"), being 55.4% to Safika Investments (Proprietary)
Limited, ("Safika") and 12% to Lexshell 687 Investments (Proprietary)
Limited ("Lexshell"), for an aggregate purchase consideration of R39
766 000 payable in cash, subject to the terms of the disposal
agreements, effective on the first day of the month subsequent to the
month in which the conditions precedent as mentioned in 2.1.4 below
are fulfilled. Lexshell is a related party and a statement as to the
fair and reasonableness of the transaction will be included in the
circular.
2.1.2 PAT, which was established in 1969, manufactures cable harnesses for
the local and international automotive manufacturing industry and it
has production facilities in Brits and in East London.
2.1.3 The purchase price payable by Safika and Lexshell in terms of the
disposal agreements is subject to a profit warranty in place for the
next 3 years based on a minimal cumulative EBITDA level which would
entail the issuing of more shares to the purchasers at par, although
such warranty is limited to the purchasers acquiring a maximum number
of shares equating to R5 million based on the current acquisition
multiples.
2.1.4 The disposal agreements are subject to, inter alia, the fulfilment or
waiver, as the case may be, of the following suspensive conditions,
namely that:
2.1.4.1 all approvals required in terms of the Competition Act and all
approvals of all other regulatory authorities (including the JSE and
Securities Regulation Panel) which are required to implement the
transaction are granted in writing, as applicable;
2.1.4.2 the shareholders of Pasdec in general meeting pass a resolution in
terms of section 228 of the Companies Act, ratifying and approving the
entering into the disposal agreements by Pasdec and the implementation
of the transaction referred to in 2.1 above;
2.1.4.3 Pasdec delivers to Safika and Lexshell an irrevocable undertaking in
writing from Pahang Off-Shore BHD ("Pahang"), the majority shareholder
in the company, in terms of which irrevocable undertaking Pahang
undertakes to attend and vote in favour of the resolution to be
adopted by the shareholders of the company in general meeting in terms
of section 228 of the Companies Act as relates to the transaction in
2.1 above;
2.1.4.4 Pahang, Safika and Lexshell obtain from the South African Exchange
Control Authorities the necessary approval for Pahang binding itself
as surety and co principal debtor on behalf of Pasdec in favour of
Safika and Lexshell in accordance with the provisions of the disposal
agreements, to the extent that its approval is required in terms of
the transaction identified in 2.1 above.
2.2 Femco Properties (Brits) (Proprietary) Limited ("Femco Properties")
2.2.1 Femco Properties has entered into a written sale agreement in terms of
which Femco Properties will sell the immovable property owned by it,
being Erf 001939 (situated at 10 Spruit Street), Brits and Erf 002373
(situated at 33 Piet Pretorius Street), Brits to Multi Direct
Investments 93 (Proprietary) Limited, for a purchase consideration of
R15 million payable in cash, dated 11 May 2006 and effective upon
transfer of the property.
2.2.2 The transaction is subject to shareholder approval.
2.2.3 The building is currently used as the registered office of the
company.
2.3 Femco Mining Motors (Proprietary) Limited ("Femco Mining")
2.3.1 Femco Mining has entered into a sale of assets agreement in terms of
which Femco Mining will sell certain of the assets and liabilities of
its business including the fixed assets, stock, and leased assets
owned by Femco Mining to Savcio Holdings (Proprietary) Limited, for a
purchase consideration of R1.89 million payable in cash, effective 20
June 2006. The conditions precedent in the agreement have been
fulfilled.
2.3.2 Femco Mining specialises in manufacturing and remanufacturing of
flameproof and standard motors for mining as well as general
industrial applications.
2.4 Arambro Investments (Proprietary) Limited ("Arambro Investments")
2.4.1 Arambo Investments has entered into a written sale agreement in terms
of which Arambro Investments will sell the immovable property owned by
it, being Erf 74, Wynberg Township, to Mr Kiniappen Moodley (on behalf
of a close corporation yet to be formed), for a purchase consideration
of R800 000 payable in cash, dated 12 June 2006 and effective upon
transfer of the property..
2.4.2 The property is currently let out to various tenants for the purposes
of rental.
3. Pro forma financial information as at 31 December 2005 as a result of
the transactions outlined above
Due to the time constraints associated with these transactions and due
to their level of complexity, the pro forma financial effects of the
above-mentioned transactions will be released in a further
announcement, to be made once the financial effects have been
finalised and reviewed by the reporting accountants.
4. Documentation
A circular containing full details of the transactions will be posted
to shareholders in due course, incorporating a notice convening a
general meeting and a form of proxy.
5. Cautionary announcement
With reference to the latest cautionary announcement dated 26 June
2006, shareholders are advised to continue to exercise caution when
dealing in their securities until a further announcement is made.
Brits
21 July 2006
KPMG Services (Proprietary) Limited - Sponsor to Pasdec
Price Waterhouse Coopers Corporate Finance (Proprietary) Limited - Independent
Professional Expert
Werksmans Inc. - Legal Advisers to Pasdec
KPMG Inc. - Reporting Accountants to Pasdec
Date: 21/07/2006 11:55:09 AM Produced by the JSE SENS Department
