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BFS
BFS
BLUE - Acquisition Of Future Finance And Issue For Cash
BLUE FINANCIAL SERVICES LIMITED
(Registration number 1996/006595/06)
(JSE Code: BFS & ISIN: ZAE000083655)
("BLUE" or "the Company")
ACQUISITION OF FUTURE FINANCE AND ISSUE FOR CASH
1. Introduction
1.1 Shareholders are advised that further to the cautionary
announcement dated 23 October 2006, BLUE has entered into an
agreement on 30 November 2006 for the acquisition of 100% of the
ordinary shares in and shareholders claims with a face value of
R29 930 584 against Micro Access Financial Services (Proprietary)
Limited trading as Future Finance ("Future Finance") from
Capital Alliance Finance (Proprietary) Limited ("CAF"), The Rekon
Trust ("Rekon") and management ("the vendors"), for a purchase
consideration of R129 930 584 ("the transaction").
1.2 Future Finance, BLUE"s first acquisition since its successful
listing on 12 October 2006, is a micro financier which operates
successfully through 66 branches throughout South Africa. The
transaction will increase BLUE"s branches in South Africa from 12
to 78 branches. Future Finance was established 10 years ago in
1996.
1.3 Future Finance specializes in the provision of term loans which
also form part of the BLUE product range. The transaction will
give Blue access to a more extensive distribution footprint
through which it will market its other products in addition to
the existing term loan product of Future Finance.
2. Terms of the transaction
2.1 The purchase consideration in terms of the transaction is R129
930 584 and will be settled as follows to the vendors:
* R10 000 000 in cash to CAF and Rekon on the 4th December
2006;
* By ceding its rights in the claims to the sellers on the
basis that the claims are anticipated to have been repaid by
the implementation of the transaction;
* R74 200 000 in cash to CAF and Rekon on the 15th of January
2007, or on the date on which the transaction is approved by
the Competition Commission whichever is later;
* a deferred payment, on 28 February 2008 of R 15.8 m comprising a
payment of R 7.9m in cash and R 7.9m in BLUE ordinary shares at
an issue price per share equal to the lower of (i) the volume
weighted average trading price of shares of Blue on the JSE over
the period from 2 January 2008 to 23 February 2008; (ii) the
volume weighted average trading price of shares of Blue on the
JSE over the 30 days preceding 24 February 2008 on which the
purchaser"s shares actually trade on the JSE; and (iii) the
closing price of Blue"s shares on such exchange on 23 February
2008.
2.2 The effective date of the transaction is 1 April 2006.
2.3 In terms of the transaction, Future Finance"s current CEO will
remain in the full time employment of the company until the 31st
of August 2007 and on a consultation basis until the 28 of
February 2008. The other members of the core management team have
committed their full time services until at least the 28th of
February 2008.
2.4 To finance the acquisition BLUE has placed 32 000 000 shares at
230 cents per share with institutions to raise R 73.6 million.
The remainder will be financed though debt or other appropriate
sources. Shareholders will be informed in due course.
2.5 The transaction is further subject to the completion of the due
diligence investigation on 8 December 2006, the finalization of
management agreements on 15 December 2006 and the approval of the
Competition commission.
2.6 The articles of association of Future Finance will be changed to
comply with the JSE"s listing requirements.
3. Rationale for the acquisition
3.1 The rationale for the Future Finance transaction is inter alia as
follows:
* material impact on BFS" forecasted earnings;
* the acquisition will substantially increase Blue"s footprint
in the South African market;
* the BLUE product range will now be marketed and distributed
through the Future Finance business;
* Future Finance will benefit from BLUE"s product ranges,
enabling it to launch new products into the market in due
course;
* take advantage of the synergies between BLUE and Future
Finance;
* improved economies of scale and costs savings.
4. Financial effects of the transaction
4.1 The unaudited pro forma financial effects are provided for
illustrative purposes only to provide information about how the
acquisition of Future Finance and the issue of BLUE ordinary
shares may have impacted on BLUE"s results and financial
position. Due to the nature of the unaudited pro forma financial
information, it may not give a fair presentation of the group"s
results and financial position after the acquisition of Future
Finance and the issue of BLUE ordinary shares. The unaudited pro
forma financial effects are based on the unaudited financial
information as disclosed in the reviewed interim results for the
six months ended 31 August 2006. The directors of BLUE are
responsible for the preparation of the unaudited pro forma
financial effects.
Reviewed Pro Forma %
Interim unaudited
results after the
transaction
Change
Earnings per share 2.50 5.82 133%
(cents)
Diluted issued 2.42 4.28 77%
shares
Headline earnings 2.5 5.82 133%
share (cents)
Net asset value 85.34 117.86 38%
per share (cents)
Net tangible asset 17.14 44.83 162%
value per share
(cents)
Shares in issue 320,000 352,000 10%
(000)
Notes:
(1) The unaudited pro forma financial effects on the results were prepared
on the basis that the acquisition of Future Finance and the issue of
BLUE ordinary shares were completed on 1 March 2006.
(2) The unaudited pro forma financial effects on the financial positions
were prepared on the basis that the acquisition of Future Finance and
the issue of BLUE ordinary shares were completed on 31 August 2006.
(3) No goodwill will arise on the acquisition.
(4) The information for Future Finance has been extracted from its
management accounts.
5. Further announcement
Shareholders will be notified once the transaction becomes
unconditional.
Pretoria
30 November 2006
DESIGNATED ADVISOR
EXCHANGE SPONSORS (PTY) LIMITED
LEGAL ADVISER
READ HOPE PHILLIPS
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.
Date: 30/11/2006 04:15:38 PM Produced by the JSE SENS Department
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