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Wsl - Wescoal Holdings - Acquisition Of Properties From Atlantis Coal

Release Date: 15/11/2007 13:07:45      Code(s): WSL
WSL - Wescoal Holdings - Acquisition of properties from Atlantis Coal           
                             Estate CC And Express Technology CC                
Wescoal Holdings Limited                                                        
(Incorporated in the Republic of South Africa)                                  
(Registration number 2005/006913/06)                                            
(JSE code: WSL & ISIN: ZAE000069639)                                            
("Wescoal" or "the group")                                                      
*    ACQUISITION OF THE COAL BUSINESSES OF ATLANTIS COAL ESTATE CC AND          
    EXPRESS TECHNOLOGY CC                                                       
*    ACQUISITION OF PROPERTIES FROM ATLANTIS COAL ESTATE CC AND EXPRESS         
    TECHNOLOGY CC                                                               
*    WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT                                      
1.   INTRODUCTION                                                               
                                                                                
    Shareholders are referred to the cautionary announcements dated 24          
August 2007 and 24 October 2007.                                            
                                                                                
    Chandler Coal (Pty) Limited ("Chandler") a wholly owned subsidiary of       
    Wescoal has, subject to the conditions precedent set out below,             
purchased the business of Atlantis Coal Estate CC ("Atlantis") and          
    Express Technology CC ("Express") ("the Atlantis/Express businesses")       
    ("the business acquisitions").  The shareholders of Atlantis and Express    
    are Champatial Dass, Sirjeethlal Dass and Sohanlal Dass ("the vendors").    
As part of the acquisition Blanford 006 (Pty) Limited ("Blanford") a        
    wholly owned subsidiary of Wescoal has agreed to purchase Erf 5688,         
    Benoni South Ext, Gauteng ("Benoni property") and Portion 129 of FARM       
    1183, FARM Number 1183, Cape, Western Cape ("Western Cape property")        
("the property acquisitions") from Express and Atlantis respectively.       
    The acquisition of the business acquisitions and the property               
    acquisitions are referred to hereafter as the "acquisitions".               
2.   RATIONALE                                                                  

    The acquisition of the Atlantis/Express businesses will enable Wescoal      
    to gain a geographical footprint in the Western Cape where at present       
    Wescoal has no operations. There is obvious growth potential in this        
region as Atlantis holds a minor market share and the business model of     
    Atlantis is complimentary to that of Chandler. The acquisition of           
    Express in Benoni will add an additional depot operation in the East        
    Rand to those of Chandler situated in Krugersdorp, Middelburg, Witbank      
and Belfast. Currently Chandler does not have a depot operation situated    
    in the East Rand. Additionally, the acquisitions add new coal supply        
    sources, increase Wescoal`s national competitiveness as well as             
    providing an additional outlet for the group`s washing operation.           
The property acquisitions have been acquired because the                    
    Atlantis/Express businesses operate from these premises.                    
3.   DESCRIPTION OF THE ATLANTIS/EXPRESS BUSINESSES                             
                                                                                
The Atlantis/Express businesses provide the logistical requirements for     
    the sourcing, distributing and marketing of coal and allied products for    
    use in both the domestic and general industrial market. Atlantis            
    operates mainly in the Western Cape and Express operates from Benoni,       
Gauteng.                                                                    
4.   TERMS AND CONDITIONS OF THE ATLANTIS/EXPRESS BUSINESSES ACQUISITION        
    On 13 November 2007 Chandler concluded an agreement for the purchase of     
    the Atlantis/Express businesses, (including only the sale assets but        
excluding the excluded assets and excluded liabilities) subject to the      
    fulfilment of the conditions precedent in 6 below, with effect from the     
    first day after fulfilment of the conditions precedent ("effective          
    date").  The purchase consideration is R 24 million payable in cash on      
the effective date.                                                         
    The vendors have signed restraint of trade agreements with Chandler.        
    Chandler has completed a due diligence on the Atlantis/Express              
    businesses to its satisfaction.                                             
5.   TERMS AND CONDITIONS OF THE PROPERTY ACQUISITIONS                          
5.1  On 14 November 2007 Blanford concluded an agreement to purchase the        
    Benoni property from Express, subject to the successful conclusion of       
    the acquisition of the Atlantis/Express businesses, for an amount of R1     
300 000. On the same day, Blanford concluded an agreement to purchase       
    the Western Cape property from Atlantis, subject to the successful          
    conclusion of the acquisition of the Atlantis/Express businesses for an     
    amount of R1 700 000.                                                       
5.2  The purchase prices are payable on date of transfer of the properties.     
6.   FUNDING OF THE ACQUISITIONS                                                
    The purchase price will be funded through the existing cash resources of    
    the company and cash raised through a placement of shares.                  
7.   CONDITIONS PRECEDENT TO THE ACQUISITIONS                                   
    The acquisition is subject to the fulfilment of the following conditions    
    precedent:                                                                  
         *    Chandler obtaining all the necessary regulatory approvals,        
including Competition Commission approval; and                    
         *    the Atlantis businesses enter into a sub lease agreement with     
              Chandler in respect of the main property occupied by the          
              Atlantis/Express businesses.                                      
8.   PRO FORMA FINANCIAL EFFECTS                                                
    The unaudited pro forma financial effects are provided for illustrative     
    purposes only to provide information about how the acquisition of the       
    Atlantis/Express businesses may have impacted on Wescoal`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 the         
    Atlantis/Express businesses.                                                
The unaudited pro forma financial effects are based on the reviewed         
    financial information for the six months ended 30 September 2007 as         
    announced on SENS on 24 October 2007.                                       
    The unaudited pro forma financial effects have been included in terms of    
the JSE Listings Requirements.  The directors of Wescoal are responsible    
    for the preparation of the unaudited pro forma financial effects.           
                      Reviewed results for  Unaudited pro forma   % Change      
                      the six months ended  after the                           
30 September 2007     acquisition 30                      
                                            September 2007                      
Earnings per share    7.3                   8.12                  11%           
(cents) (1)                                                                     
Headline earnings     7.1                   7.93                  12%           
per share (cents)                                                               
(1)                                                                             
Fully diluted         7.2                   8.08                  12%           
earnings per share                                                              
(cents) (1)                                                                     
Fully diluted         7.1                   7.89                  11%           
headline earnings                                                               
per share (cents)                                                               
(1)                                                                             
Net asset value per   51.11                 50.83                 (1%)          
share (cents) (2)                                                               
Net tangible asset    16.46                 -2.94                 (118%)        
value per share                                                                 
(cents) (2)                                                                     
Shares in issue       105 931               105 931                             
(`000)                                                                          
Weighted average      104 972               104 972                             
number of shares                                                                
(`000)                                                                          
Fully diluted         105 472               105 472                             
weighted average                                                                
number of shares                                                                
(`000)                                                                          

Notes:                                                                          
1)   The unaudited pro forma financial effects on the results were prepared     
    on the basis that the acquisition of the Atlantis/Express businesses was    
completed on 1 April 2007.                                                  
2)   The unaudited pro forma financial effects on the financial position were   
    prepared on the basis that the acquisition of the Atlantis/Express          
    businesses was completed on 30 September 2007.                              
3)   The "After the Acquisitions" earnings, headline earnings, diluted          
    earnings and diluted headline earnings per share have been based on 50%     
    of the unaudited annual financial statements of the Atlantis/Express        
    businesses for the year ending 28 February 2007.                            
4)   The "After the Acquisitions" net asset value and net tangible asset        
    value per share have been adjusted to include the assets of the             
    Atlantis/Express businesses for the year ending 28 February 2007 and the    
    estimated transaction costs have been written off against share premium.    
5)   Goodwill of approximately R20 million will arise on the acquisition.       
9.   FURTHER ANNOUNCEMENT                                                       
    Shareholders will be notified once the acquisition has become               
    unconditional.                                                              
10.  WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT                                      
    Caution is no longer required to be exercised by shareholders when          
    dealing in Wescoal`s securities.                                            
Johannesburg                                                                    
15 November 2007                                                                
Designated adviser              Exchange Sponsors                               
Attorneys for Wescoal           Kim Warren, Rambau & Associates                 
Date: 15/11/2007 13:07:45 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             .                  
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information disseminated through SENS.                                          



                                        
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