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CULLINAN HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1902/001808/06)
JSE Share code: CUL ISIN: ZAE000013710
("Cullinan" or "the company")
Disposal of certain assets, offer to minority shareholders and withdrawal
of cautionary announcement
1. INTRODUCTION
Shareholders are referred to the most recent cautionary announcement dated
18 February 2002 and are advised that the company has entered into
indivisible agreements ("the Agreements") whereby the company will, subject
to fulfilment of the conditions precedent set out in paragraph 4 below:
1.1 dispose of its entire shareholding in Cullinan Holdings UK Limited
("Cullinan UK"), comprising 83,3% of the total issued share capital of
Cullinan UK, to Outdoor Lifestyle Holdings Limited ("OLH"), the largest
single shareholder in the company, for cash ("the Cullinan UK disposal");
and
1.2 dispose of its shareholding in Midmacor Industries Limited ("Midmacor"),
a wholly-owned subsidiary, to OLH and Simon John Nash ("SJN"), for cash
("the Midmacor disposal") (collectively referred to as "the Disposals").
Furthermore, in terms of the Agreements and subject to fulfilment of the
conditions precedent set out in paragraph 4 below, OLH and SJN have accepted
an offer from Travcorp Financial Services Limited ("Travcorp") to dispose of
382 906 068 ordinary shares in the company, at a price of 11 cents per
Cullinan share ("the share sale"). Consequently, Travcorp will own 55,9% of
the total issued share capital of Cullinan and become the controlling
shareholder of Cullinan. In terms of both Rule 8 of the Securities
Regulation Code on Take-overs and Mergers ("the Code") and the Agreements,
Travcorp will extend a similar offer to all Cullinan shareholders, other
than those shareholders who have agreed not to accept the offer, to acquire
their shares at an offer price of 11 cents per share ("the offer")
(collectively referred to as "the Transactions").
2. Rationale for the Transactions
The Transactions are in line with Cullinan's strategic intent of focusing on
its "tourism and travel" interests and exiting from its "outdoor lifestyle"
interests. The Disposals are a continuation of the disposal programme
referred to in the annual financial statements.
The injection of cash from the Disposals will eliminate short-term bank
borrowings and provide additional working capital for the group, enabling
the remaining tourism and travel businesses to achieve their potential
through both organic and acquisitive growth.
Travcorp is an investment company and is part of the internationally-based
tourism and travel group, The Travel Corporation Limited.
Travcorp plans to expand Cullinan, both domestically and in overseas tourist
activities, with its primary objective being to add travel-related
businesses in Australasia, Europe and the United States of America. It will
also concentrate on acquiring businesses that will benefit the South African
tourist industry. Current activities of The Travel Corporation Limited group
of companies include a large minority interest in Wilderness Safaris
Limited, as well as wholly-owned subsidiaries operating the following
businesses in South Africa: Trafalgar Tours, Contiki Tours and Insight
Vacations.
3. The Transactions
3.1 Terms of the Disposals
3.1.1 Cullinan UK disposal
Cullinan has disposed of its entire shareholding in Cullinan UK, comprising
500 shares (83,3%) in the issued share capital of Cullinan UK, to OLH for a
cash consideration of R17,2 million. Cullinan UK owns 53% of the issued
share capital of Karrimor International Limited ("Karrimor"). Karrimor is
one of the leading European brands specialising in technical outdoor
clothing, footwear and rucksacks. Cullinan has provided no warranties.
3.1.2 Midmacor disposal
Cullinan has disposed of the entire issued share capital of, and claims
against, Midmacor to OLH and SJN for a cash consideration of R11,6 million.
Midmacor owns 100% of the issued share capital of MTM Trading (Proprietary)
Limited which, in turn, owns the business of Cadac, a leading brand
specialising in outdoor products including, inter alia, barbeques, stoves,
lamps, tents, sleeping bags and LPG cylinders. Midmacor also owns 100% of
the issued share capital of Karrimor Africa (Proprietary) Limited which is
the local licensee for Karrimor. Cullinan has provided no warranties.
3.1.3 Related parties
The purchasers of both Cullinan UK and Midmacor are related parties through
their significant shareholdings in Cullinan. In terms of the Listings
Requirements of the JSE Securities Exchange South Africa ("the JSE") ("the
Listings Requirements"), the resolution to approve the Disposals will be
subject to a simple majority of votes of the shareholders of Cullinan, other
than the related parties, being cast in favour of the resolution at a
general meeting of the company. Furthermore, the related parties will not be
taken into account in determining a quorum at the general meeting.
3.1.4 Utilisation of the proceeds
The proceeds from the Disposals will be used to eliminate short-term bank
borrowings and provide additional working capital for the group.
3.1.5 Effective date
The effective date of the Disposals is 1 October 2001.
3.2 Terms of the offer
3.2.1 Upon fulfilment of the conditions precedent set out in paragraph 4
below and the share sale, Travcorp will hold 382,9 million Cullinan shares.
3.2.2 As this constitutes an affected transaction in terms of the Code, a
mandatory offer will be made by Travcorp to Cullinan minority shareholders,
subject to fulfilment of the conditions precedent set out in paragraph 4
below.
3.2.3 In terms of the Code, the offer consideration will be 11 cents per
Cullinan share, exceeding the highest price paid by Travcorp for Cullinan
shares within the three months preceding the date of this announcement.
Travcorp has obtained the written undertaking from shareholders holding 47,5
million Cullinan shares not to accept the offer, which represents
approximately 6,9% of the issued share capital of Cullinan. Subject to
compliance with the Listings Requirements, it is intended to retain the
listing of Cullinan on the JSE.
3.2.4 Confirmation of cash resources
The Royal Bank of Canada (Channel Islands) Limited has confirmed to the
Securities Regulation Panel that Travcorp has sufficient resources to honour
its commitments in terms of the offer.
3.2.5 Opinion of the board of Cullinan and appointment of independent
advisor
BDO Spencer Steward, Chartered Accountants (SA), has been appointed as
independent advisor to the Cullinan minority shareholders. BDO Spencer
Steward and the board of directors of Cullinan will consider the terms and
conditions of the Transactions in terms of the Code and Listings
Requirements and both will report their opinions as to whether or not the
terms of such offer are fair and reasonable to the minority shareholders of
Cullinan.
4. Conditions precedent
The conditions precedent of the Agreements and the offer include, inter
alia:
4.1 completion by Travcorp of its due diligence exercise;
4.2 approvals by the Competition authorities and any other applicable
regulatory bodies;
4.3 approval, in general meeting, by the shareholders of Cullinan, excluding
the related parties, of the Disposals; and
4.4 South African Reserve Bank approval.
5. Financial effects of the Transactions
The table below sets out the financial effects of the Transactions, based on
the audited annual financial statements of Cullinan for the year ended 30
September 2001:
After the After the
Before offer* Change Disposals Change
Notes (cents) (cents) (cents) (cents) (cents)
(Loss)/Earnings
per share 1 (4,4) 0,8 5,2 1,0 5,4
Headline (loss)/
earnings
per share 1 (0,6) 0,8 1,4 1,8 2,4
Net asset value
per share 2 1,0 11,0 10,0 1,0 -
Tangible net
asset value
per share 2 (1,0) 11,0 12,0 (1,0) -
*Assuming that a minority shareholder accepted the offer of 11 cents per
share.
Notes:
1. Based on the assumption that the Transactions were effective on 1 October
2000 and that the offer proceeds yielded 7,7% after tax and the cash
proceeds from the Disposals flowed on 1 October 2000 and eliminated short-
term bank borrowings.
2. Based on the assumption that the Transactions were effective on 30
September 2001.
6. Circular to shareholders
A circular containing details of the offer, including the salient dates and
times and incorporating a form of acceptance, surrender and transfer, will
be mailed to the Cullinan minority shareholders in due course.
7. Withdrawal of cautionary announcement
Shareholders are advised that, with the publication of this announcement,
they are no longer required to exercise caution in dealing in Cullinan's
shares.
Sandton
3 April 2002
Corporate advisor
Brait
Sponsor
LPC Manhattan Sponsors (Pty) Ltd
(Registration number 1999/024792/07)
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