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WSL - Wescoal Holdings Limited - Sale of Blesboklaagte washing plant

Release Date: 15/08/2011 09:00:04      Code(s): WSL
WSL - Wescoal Holdings Limited - Sale of Blesboklaagte washing plant            
WESCOAL HOLDINGS LIMITED                                                        
(Incorporated in the Republic of South Africa)                                  
(Registration number 2005/006913/06)                                            
JSE Share code: WSL ISIN: ZAE000069639                                          
("Wescoal" or "the company" or "the group")                                     
SALE OF BLESBOKLAAGTE WASHING PLANT                                             
1    INTRODUCTION                                                               
Shareholders are advised that a subsidiary of Wescoal, Wescoal Mining (Pty)     
Limited ("Wescoal Mining"), has entered into a Sale of Assets Agreement with    
Slater Coal Marketing (Pty) Limited ("Slater") ("the transaction"), subject to  
certain conditions precedent. The subject matter is the washing plant situated  
at Portion 26 of the Blesboklaagte farm in Witbank, Mpumalanga ("the            
Blesboklaagte plant").                                                          
2    BACKGROUND INFORMATION                                                     
Wescoal is a junior coal miner with a trading arm. The company recently entered 
into a comprehensive restructuring programme to restore operations to           
profitability and to strengthen its financial position. The coal washing        
operations at Blesboklaagte has been unprofitable during previous financial     
years and a decision was made to close the plant on 31 March 2011.              
3    RATIONALE FOR THE DISPOSAL                                                 
The sale of the Blesboklaagte plant is in line with Wescoal`s strategy to focus 
on profitable operations and to strengthen the group`s cash resources.          
4    TERMS AND CONDITIONS OF THE DISPOSAL                                       
4.1  On 12 August 2011 ("the signature date"), Wescoal entered into a Sale of   
    Assets Agreement for the sale of the Blesboklaagte plant to Slater.         
4.2  The purchase price payable for the Blesboklaagte plant is the aggregate of 
R 15 million plus Value Added Tax ("VAT").                                  
4.3  The effective date of the transaction is 25 August 2011 ("the effective    
4.4  The purchase price will be payable as follows:                             
4.4.1     R 6 million (plus VAT), in cash to Wescoal Mining on the signature    
         date which has been received; and                                      
4.4.2     the balance of R 9 million (plus VAT) shall be paid in three equal    
         monthly payments of R 3 million (plus VAT) each. Each payment shall be 
made on the seventh day of each successive month, starting on 7 of     
         September 2011.                                                        
4.5  In the event that the washing operations at the Blesboklaagte plant are    
    halted within the first 12 months after the commencement of operations, or  
14 months after signature date, whichever is the sooner, as a result of the 
    existing environmental compliance issues, then Slater retains the right of  
    ownership of the plant and Wescoal Mining will refund Slater R 7 million in 
    compensation to recover the loss of profits and the costs of relocating the 
plant. The refund will be reduced on a pro-rata basis during the prescribed 
    12 or 14 month period.                                                      
5    CONDITIONS PRECEDENT                                                       
The disposal is conditional upon Wescoal Mining restoring the Blesboklaagte     
plant to an operational condition.                                              
The unaudited pro forma financial effects set out below are provided for        
illustrative purposes only to provide information about how the disposal may    
have impacted on Wescoal`s results and financial position. Due to the nature of 
the unaudited pro forma financial effects, it may not give a fair presentation  
of the company`s results and financial position after the disposal. The         
unaudited pro forma financial effects are based on the audited annual financial 
information of Wescoal at 31 March 2011. The directors of Wescoal are           
responsible for the preparation of the unaudited pro forma financial effects.   
                              "Before the   Pro forma    % Change               
                              disposal"     "After the                          
audited       disposal"                           
                              annual        unaudited                           
                              results for   results for                         
                              the year end  the year                            
31 March      end                                 
                              2011          31 March                            
  Loss per share (cents)      (2) (29.1)    (6.90)       76.29%                 
Headline (loss) per share   (2) (26.2)    (8.7)        66.63%                 
  Net asset value ("NAV")     (4) 86.51     91.48        5.74%                  
  per share (cents)                                                             
Net tangible asset value    (4) 44.34     50.74        14.43%                 
  ("NTAV") per share (cents)                                                    
  Weighted average shares in  150 271       150 271                             
  issue (`000)                                                                  
Shares in issue at year     157 931       157 931                             
  end (`000)                                                                    
(1)  The "Before the disposal" column has been extracted without adjustment,    
    from the audited annual results of Wescoal for the year ended 31 March      
(2)  The unaudited pro forma financial effects on the loss and headline loss per
share were prepared on the basis that the disposal was completed on 1 April 
(3)  The "After the disposal" basic loss per share and headline loss per share  
    have been adjusted for the following:                                       
*    the exclusion of the results of the Blesboklaagte plant for the year   
         ended 31 March 2011;                                                   
    *    the after tax profit on the sale of the Blesboklaagte plant amounting  
         to R7.67 million; and                                                  
*    interest earned on the R6 million cash proceeds.                       
(4)  The unaudited pro forma financial effects on the NAV and NTAV were prepared
    on the basis that the disposal was completed on 31 March 2011.              
(5)  The "After the disposal" NAV and NTAV per share have been adjusted for the 
    *    cash received of R6 million;                                           
    *    a current debtor of R9 million has been raised for the outstanding     
         purchase consideration; and                                            
*    goodwill of R2, 27 million has been impaired.                          
7    CATEGORISATION OF THE TRANSACTION                                          
The transaction is categorised, in terms of the JSE Limited`s Listings          
Requirements, as a Category 2 transaction and does not require approval by the  
shareholders of Wescoal.                                                        
8    FURTHER ANNOUNCEMENT                                                       
Shareholders will be notified once the transaction becomes unconditional.       
15 August 2011                                                                  
Exchange Sponsors                                                               
Date: 15/08/2011 09:00:03 Supplied by www.sharenet.co.za                     
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