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BSR
BSR
BSR - Basil Read - Acquisition of the Businesses of Blasting & Excavating (Pty)
Limited and Withdrawal of Cautionary
Basil Read Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number 1984/007758/06
Share Code: BSR ISIN: ZAE000029781
("Basil Read" or "the company")
ACQUISITION OF THE BUSINESSES OF BLASTING & EXCAVATING (PTY) LIMITED
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction and terms
The board of Basil Read is pleased to announce that the company, through
its wholly owned subsidiary, has reached agreement with Blasting &
Excavating (Proprietary) Limited ("the vendor") to acquire all the shares
in and claims on loan account against all the subsidiaries of the vendor
("the businesses") for a consideration of R100 million ("the
consideration") (collectively, "the acquisition"). The acquisition
includes the exclusive right to the proprietary name "Blasting &
Excavating" and any derivative thereof available to the vendor.
The effective date of the acquisition is the first day of the calendar
month following the date on which all the conditions precedent (set out in
paragraph 5 below) are fulfilled ("effective date").
2. Settlement of the consideration
The consideration of R100 million will be settled as follows:
- An initial cash payment of R70 million payable on the effective date;
and
- the balance will be payable in three installments of R10 million each
over three years subject to the business meeting profit targets set in
respect of each completed financial year. The executives of the
businesses will also receive a performance bonus in terms of
performance contracts covering the next three years.
The acquisition will be funded by the private placement of 2.5 million
Basil Read Holdings Limited shares and the balance from available cash and
bank facilities.
3. Description of the businesses and rationale for the acquisition
The vendor`s core business is the provision of specialized drill and blast
services for clients including mines, construction contractors and
commercial quarries. Since this business is currently doing all drilling
and blasting for the Basil Read Mining Division, synergies exist which will
enhance the competitiveness of the open pit mining operations and further
mitigate risks within the division.
The vendor`s contract work for its other clients will carry on in the
normal course of business.
The vendor`s business is profitable, represents a significant earnings
enhancement for Basil Read and is a step forward in the company`s stated
intention of growing by acquisition as well as organically.
4. Financial effects
The unaudited pro forma financial effects of the acquisition, based on the
published reviewed results of Basil Read for the period ended 31 December
2006 are set out below. The unaudited 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
Basil Read. Preparation of the unaudited pro forma financial effects is the
responsibility of the directors. Because of their nature, the pro forma
financial effects may not fairly present Basil Read`s financial position
after the acquisition or the effect on future earnings:
Before the After the %
acquisition acquisition change
-
Pro forma
Earnings (cents per share) 93.53 116.85 24.93
Headline earnings (cents 89.62 113.10 26.20
per share)
Net asset value (cents per 282.05 330.46 17.16
share)
Net tangible asset value 267.28 257.27 (3.75)
(cents per share)
Average and weighted 57 846 60 346 4.32
average number of shares in
issue (R`000)
Number of shares in issue 70 720 73 220 3.54
(R`000)
Notes and assumptions:
(1) The figures in the "Before" column are extracted from Basil Read`s
published reviewed results for the year ended 31 December 2006.
(2) Earnings and headline earnings figures in the "After" column are based
on the assumption that the acquisition took place on 1 January 2006,
after taking into account the following adjustments:
- 2.5 million shares were issued in part payment for the
acquisition on 1 January 2006;
- unaudited financial results of the vendor for the 12 months ended
31 December 2006;
- an average interest rate of 8% was applied on the cash portion of
the consideration; and
- a company tax rate of 29%.
(3) The net asset value and net tangible asset value figures in the
"After" column are based on the assumption that the acquisition took
place on 31 December 2006 and that an assumed share price of R17,00
per share was used to calculate the portion of the purchase
consideration settled by the placement of 2.5 million Basil Read
Holdings Limited shares.
5. 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 completion of a formal financial and legal due diligence
investigation of the vendor`s subsidiaries;
- the conclusion of all contractual agreements relating to the
acquisition; and
- the requisite regulatory compliance and approval to the extent
necessary.
6. Categorisation of the acquisition
The acquisition is categorised as a Category 3 transaction in terms of the
JSE Limited Listings Requirements.
7. Withdrawal of cautionary announcement
Shareholders are referred to the cautionary announcement published on SENS
on 22 February 2007 advising that the company had entered into
negotiations. By virtue of the conclusion of the acquisition on the terms
referred to in this announcement, caution is no longer required to be
exercised by shareholders when dealing in their securities.
Johannesburg
22 March 2007
Sponsor: Sasfin Capital
(A division of Sasfin Bank Limited)
Date: 22/03/2007 17:10:19 Produced by the JSE SENS Department.
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