| Tue 19 Dec 2006, 14:03 | | YRK - Yorkcor - Acquisition of the business of the |
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YRK
YRK
YRK - Yorkcor - Acquisition of the business of the Goedgeloof Plantation
The York Timber Organisation Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1916/004890/06)
Share code: YRK & ISIN code: ZAE000008108
("Yorkcor" or "the company")
Acquisition of the business of the Goedgeloof Plantation
1. Introduction and terms
The board of Yorkcor is pleased to announce that Yorkcor, through its
subsidiary, York Timbers Limited ("York"), has reached agreement with
Crocodile Valley Estates (Pty) Limited ("the vendor") for the
acquisition of the vendor`s entire business as a going concern ("the
business") for a consideration of R32,3 million ("the consideration")
(collectively, "the acquisition"). The effective date of the
acquisition is the date at which the property forming part of the
business is transferred into the name of York, which is expected to be
in early 2007.
The consideration of R32,3 million will be settled by means of:
- an amount of R750 000 already paid as a deposit in order to
secure an exclusive option to purchase;
- an amount of R31,6 million payable in cash on the effective date
("the final cash payment")
Yorkcor will initially fund the consideration out of its available
cash resources and will raise a long term bond against the property in
due course of approximately R20 million.
2. Description of the business and rationale for the acquisition
The business is situated near Graskop in Mpumalanga and comprises soft
and hardwood plantations on three adjacent properties, a third of
which are mature and ready for harvesting, as well as silvicultural
operations, beneficiation of sawlogs, and timber trading and
processing, including plant and equipment. The business is being
acquired free of liabilities.
The board previously communicated to shareholders Yorkcor`s four-
pronged growth strategy, namely the securing of log supply lines,
pursuing selected acquisitions, realising selected trading
opportunities and promoting its involvement with Black Economic
Empowerment ("BEE"). The acquisition is therefore viewed as
strategically important by the board in as much as it:
- allows Yorkcor control over additional sources of sawlog supply;
- will facilitate the continued expansion of the timber processing
of the York group within the aegis of Yorkcor; and
- has been identified as an appropriate opportunity to expand the
company`s BEE credentials at an operational level by inviting
broad based BEE entities to participate directly in the prospects
of the business.
Two of the three properties have land claims under investigation.
Yorkcor`s Directors are dealing constructively with these claims and
have taken the requisite steps to manage the process, including making
allowance for claimants in an empowerment transaction at group level,
bringing claimants into the subcontracting activities that will be
required in the management of the business, and working in cooperation
with the Land Claims Commissioner. The land claims in any event apply
to the properties and not the standing timber where most of the value
lies. The Directors are working towards long term leases in favour of
the claimants, once the commissioner has paid compensation to York for
the land values.
3. Financial effects
The pro forma financial effects of the acquisition, based on the
published unaudited half year results of Yorkcor for the six months
ended 30 June 2006 are set out below. The pro forma earnings figures
illustrate the possible financial effects if the acquisition had been
implemented on 1 January 2006, that is for a period of six months,
whereas the pro forma net asset value figures illustrate the possible
financial effects if the acquisition was implemented on 30 June 2006.
The pro forma financial effects have been prepared for illustrative
purposes only to provide information on how the acquisition may have
impacted on the results and financial position of Yorkcor. Preparation
of the pro forma financial effects is the responsibility of the
directors. Because of their nature, the pro forma financial effects
may not fairly present Yorkcor`s financial position after the
acquisition or the effect on future earnings:
Before the After %
acquisition the change
- acquisition
Six months -
ended Pro forma
30 June 2006 Six months
Earnings (cents per 87.1 92.1 (1) +5.8%
share)
Headline earnings (cents 87.1 92.1 (1) +5.8%
per share)
Net asset value and net 743.3 743.3 (2)
tangible asset value 0%
(cents per share)
Average and weighted 11 040 597 11 040 597 0%
average number of shares
in issue
Notes and assumptions:
(1) Pro forma earnings and headline earnings are based on Yorkcor`s
published unaudited interim results for the six months ended 30
June 2006 and incorporate the estimated income statement of the
vendor for the six months ended 30 June 2006, after taking into
account the following adjustments:
- management`s assessment of the operating costs of the
business within the Yorkcor group;
- an interest rate on call deposits of 6% and a bond interest
rate of 10%; and
- a company tax rate of 29%.
- a bond is raised of R20 million rand against the acquisition
and the interest is taken into account for 6 months.
(2) The net asset value and net tangible asset figures are based on
the assumption that the acquisition happened on 30 June 2006
4. Conditions precedent
The acquisition is subject to conditions that are considered normal
for a transaction of this nature, of which the following remain
outstanding:
- the vendor indemnifying York against any claims by employees
arising before the effective date; and
- the requisite regulatory compliance and approval.
5. Categorisation of the transaction
The acquisition is categorised as a Category 2 transaction in terms of
the JSE Limited Listings Requirements. A circular giving full details
of the acquisition is being prepared and will be posted to
shareholders in due course.
Pretoria
19 December 2006
Sponsor: Sasfin Capital
A division of Sasfin Bank Limited
Date: 19/12/2006 14:03:01 Produced by the JSE SENS Department.
