| Mon 6 Nov 2006, 12:30 | | Yorkcor - Change of control and BEE transaction |
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YRK
YRK
Yorkcor - Change of control and BEE transaction
The York Timber Organisation Limited
(Incorporated in the Republic of South Africa)
(Registration number 1916/004890/06)
Share code YRK & ISIN ZAE000008108
("Yorkcor" or "the company")
THE YORK TIMBER ORGANISATION (YORKCOR) LIMITED
TUCKER FAMILY TO RELINQUISH CONTROL TO UK-BASED BLACKSTAR plc
BEE SHAREHOLDERS TO ACQUIRE 26% OF YORKCOR
Forestry products group Yorkcor has announced that the Tucker family, which has
exercised control of the group for almost a century, is to sell majority
ownership to Luxembourg based Blackstar Investors plc (Blackstar), with a
further 26% earmarked for BEE shareholders.
In terms of the transaction, the Tucker family will dispose of its entire 84,75%
interest in Yorkcor. Blackstar and Yorkcor will make a joint cash offer to
acquire 100% of Yorkcor"s issued share capital at R9,80 a share, with Yorkcor
undertaking to acquire 26% of this on behalf of new BEE shareholders, and
Blackstar the balance.
Blackstar, which will initially own 58,75% of Yorkcor, intends to place 10% to
15% of Yorkcor"s entire issued share capital with other investors and/or
institutions over a period of time, at an appropriate price, in order to
increase the free-float and to take its investment below a 50% controlling
position.
The new BEE shareholders comprise a range of staff and community trusts. They
will acquire their shares via two special purpose vehicles (SPVs) in fulfilment
of the group"s black economic empowerment objective. Blackstar has agreed to
provide funding to the BEE trusts to facilitate the acquisition.
On completion of the offer, Blackstar will issue cumulative, convertible, voting
preference shares to the BEE trusts, carrying 26% of the combined ordinary and
preference share votes, effectively to replace the 26% ordinary shares
repurchased in terms of the joint offer. These preference shares are convertible
into ordinary shares on a one-for-one basis after three-and-a-half years, and
will carry a coupon rate of 1,25% below prime.
Sasfin Capital has been appointed to advise the Yorkcor board on the joint offer
and the preference share issue. This offer price is 21,6% below the prevailing
market price for Yorkcor shares on 3 November 2006, the last trading day
preceding the publication of this announcement.
According to the announcement, the transaction would have lifted the latest
interim earnings per share by 12% had it taken place on 1 January 2006.
Yorkcor says the intention is to retain the group"s JSE listing as it is the
ideal vehicle to serve as a platform for growth.
Blackstar is an offshore investment company listed on the London Alternative
Investment Market (AIM) focused largely on BEE opportunities in South Africa. It
identified a unique opportunity presented by the sale of the Tucker family"s
interest to play a significant role in the timber industry in South Africa, both
as an investor and as the facilitator of black empowerment within Yorkcor.
One of Yorkcor"s principal strategic objectives is the implementation of a broad
based BEE structure that will result in approximately 26% of the company"s
equity and voting rights being beneficially held by black people. Moreover, the
company recognises the need to address the lack of participation by black women
and broad-based structures in BEE consortia and has structured the BEE component
of the transaction with these considerations foremost in mind.
In terms of the BEE component of the transactions, it is intended that the
preference shares, giving the holders an aggregate 26% interest in the company,
will be issued to the following SPVs:
10% will be issued to an SPV, the entire issued ordinary share capital of which
will be owned by a trust (the "staff trust") to be established for the benefit
of the Yorkcor group"s current employees (of all races), which the board
believes is consonant with the company"s policy of "equal opportunity for all
employees". The salient features of the staff trust are intended to be:
* that preferential participation will be given to black people and women;
* that in determining the extent of an employee"s participation, regard will
be had to his or her length of service with the Yorkcor group; and
* 10% of the participation in the staff trust will be reserved for black
people in managerial positions for the purpose of attracting and retaining
first-class talent.
Based on the foregoing, it is estimated that 94% of the participatory interest
in the staff trust will benefit black people; and
16% will be issued to an SPV the entire issued ordinary share capital of which
will be owned by a trust (the "community trust") to be established for the
benefit of certain historically disadvantaged Mpumalanga communities and other
strategic BEE partners described more fully below. The salient features of the
community trust are intended to be:
* the strategic BEE partners are new BEE ownership entrants and will become
40% beneficiaries of the community trust;
* the community trust will target various community groupings and the
strategic BEE partners will assist them in the purchasing of forestry
businesses;
* Yorkcor will by means of a supply agreement facilitate the funding to
purchase any forestry business acquired and will assist with the management
of these businesses;
* the strategic BEE partners will provide advisory services to these
community groupings to establish businesses and become suppliers to Yorkcor
thereby enhancing the value to shareholders;
* the community groups will therefore improve Yorkcor BEE targets in respect
of preferential procurement and enterprise development.
The company has identified Silulu Investment Services (Pty) Ltd ("Silulu") as
the key strategic BEE partner of Yorkcor. Silulu brings with it substantial
experience and skill in the areas of enterprise development and transformation.
Silulu Investment Services is managed and controlled by Gay Mokoena, who is a
non-executive director of Yorkcor.
The transaction is subject to approval by the JSE, the Securities Regulation
Panel, the exchange control authorities and the competition authorities, among
others. After all the conditions precedent have been fulfilled and the joint
offer implemented, Blackstar Managers, on behalf of Blackstar, intends to work
with existing management to reconstitute the Yorkcor board. The objective of
these changes would be to give Yorkcor the appropriate BEE credentials and to
give Blackstar and other institutional shareholders the appropriate independent
non-executive representation.
Blackstar has indicated that the future strategy for the group is to pursue
organic growth through re-investment, growth through acquisition and extension
of the value chain, both up-stream through the acquisition of forests and down-
stream through acquisitions or the creation of start-up value-adding timber
businesses. Yorkcor intends to grow sales in the increasingly attractive South
African market and continue to grow its foreign trade.
ABOUT BLACKSTAR
Blackstar Investors plc is a company listed on the Alternative Investment Market
(AIM), which is operated by the London Stock Exchange, with GBP80 million of
capital raised from foreign institutions for investment investment primarily in
South African BEE transactions. Blackstar Investors" shareholders include
Fidelity International, Schroders and Merrill Lynch amongst others. Blackstar
Managers, headed by Andrew Bonamour, advises on the funds of Blackstar
Investors.
ABOUT SILULU INVESTMENT SERVICES
Silulu Investment Services is a private company involved in financial and
consulting services for the SMME sector. It specialises in deal-making for BEE
consortia and enterprise development mainly in the Mpumalanga region. It is
headed by Gay Mokoena, who is a development economist with a B Admin (Hons)
degree and a Master of Business Leadership (MBL) from Unisa. Gay is currently a
non-executive director of Yorkcor.
ABOUT YORKCOR
Yorkcor is a forest products enterprise listed on the JSE limited. It is one of
the most experienced and efficient sawmilling companies in South Africa, adding
value to wood through creative applications and strategic focus on niche markets
at home and abroad. The company also successfully markets timber products
locally and overseas. Yorkcor timber is manufactured strictly from plantations
that are renewable resources.
Yorkcor employs about 1 400 people and generated R284 million in revenues in
2005. Incorporated in 1916 as Katzenellenbogen Limited the company"s shares
have been listed on the JSE since 1946.
Ends
ISSUED FOR: YORK TIMBER ORGANISATION LIMITED
CONTACT: Ivor Tucker, CEO: 012 804 9730 or John Lehman,
Financial Director: 082 388 8998
FAX NO: 012 804 8611
E-MAIL: Ivor@yorkcor.co.za; john@yorkcor.co.za
WEBSITE : www.yorkcor.co.za
ISSUED BY: Letsema Communications
CONTACT: Tish Stewart 011 325 4195 / 082 443 6399
FAX NO: 011 325 4199
E-MAIL: tish@letsemacom.co.za
DATE : 06 November 2006
Date: 06/11/2006 12:30:33 PM Produced by the JSE SENS Department
