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Further detailed cautionary announcement and renewal of cautionary announcement
LABAT AFRICA LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1986/001616/06)
(“Labat” or “the company”)
ISIN Code: ZAE 000018354 Share code: LAB
FURTHER DETAILED CAUTIONARY ANNOUNCEMENT AND RENEWAL OF
CAUTIONARY ANNOUNCEMENT
Further to our announcements of 21 February 2014, 7 April 2014 and 29 April 2014
we are pleased to be able to announce further particulars of various rail related
initiatives as follows:
1. Participation in rolling stock fleet upgrade
Following the announcement on the 29 April 2014 by Passenger Rail Agency of
South Africa (“PRASA”) and Gibela Rail Transportation (“Gibela”) that financial
closure has been reached on the first phase of R51 billion Rolling Stock fleet
upgrade, Labat and its partner through a signed Memorandum of Understanding,
BFG International Group (“BFG”), a Bahrain based global leader in the design
and manufacturing of Fibre Reinforced Polymer (“FRP”) products, will accelerate
its plans to establish a South African manufacturing facility to manufacture
products for the Rail Industry initially. The BFG/Labat entity has been awarded a
portion of the PRASA/Alstom tender to supply interiors for the new railway
coaches. The first phase of this tender is estimated to be at least R1.5 billion over
a ten year period.
The plan is to establish a fully-fledged BFG facility in Johannesburg producing
the full range of BFG products, including a range of Rail products together with a
range of Architectural and Wind Energy products.
Global Emerging Markets (“Gem”), through its existing $100 million equity line of
credit with Labat, has agreed with BFG to provide funding for the establishment
of the business. It is estimated that between 200 to 300 jobs will be created in
this new venture and is in line with PRASA’s objectives of achieving a local
content level of over 65% and the creation of 33 000 direct and indirect jobs.
2. Proposed acquisition of controlling interest in Imfuyo Projects Proprietary
Limited (“Imfuyo Projects”)
Labat further announces that it has made an offer to acquire a majority
shareholding in Imfuyo Projects and its 100% subsidiary Imfuyo Air Products.
Voith Turbo, a German based Industrial group, has waived its pre-emptive right in
favour of Labat. The acquisition is from a related party and the acquisition will be
subject to the JSE Listings requirements, which will include obtaining a fairness
opinion on the transaction.
The purchase consideration will be by way of 20 000 000 ordinary shares, with
the potential of a further 10 million ordinary shares based on performance to be
agreed, at an issue price based on the independent valuation of Imfuyo Projects.
Imfuyo Projects is a manufacturer of a range of electronic and other components
to the Rail industry particularly the existing PRASA fleet. Imfuyo Projects is also
the local agent or partner of several international OEM’s who require local
partners in order to deliver on the current Rail Initiatives. Some of these OEM’s
have been awarded contracts by Gibela of more than R2 billion. Discussions are
underway with a view of establishing similar facilities like the one with BFG.
Imfuyo Air Products is an importer and distributor of Compressors and related
products with a Rail emphasis.
Final terms and pro forma financial effects will be announced in due course once
the independent valuation has been completed. A circular will be issued to Labat
shareholders in due course as it is expected that the acquisition will require
shareholder approval in general meeting.
3. Women in Rail Initiative
Labat has entered into an agreement with a Women’s Group who is part of the
Women in Rail Initiative of PRASA to be their partner in building capacity in Rail
to take advantage of existing opportunities and creating real Women in Rail
Industrialists.
The new entity to be titled Labat Rail will be owned 49% by Labat and 51% by the
Woman In Rail Group who has access to specific opportunities to provide
products and services to PRASA and Transnet. This entity will be the operating
entity and will provide opportunities in all aspects of rail to historically
disadvantaged individuals with an emphasis on women and young female
learners. This is in line with Government’s initiative in providing opportunities for
women in rail.
Through this Labat will create a Local Rail Company which will provide a range of
products and services to the industry, together with a research and development
capability to train young women to part of the mainstream process of the rail
industry. Labat will also be looking at a number of acquisitions to enhance its
local capacity.
Shareholders are further reminded that while these processes are on-going the
company has embarked on a rights issue which is simultaneously underway with a
view to allow existing shareholders an opportunity to participate in the anticipated
growth of the Company. As previously advised, the directors intend following their
rights in the Rights Offer.
Renewal of cautionary announcement
These transactions and negotiations when successfully concluded, may have an
effect on the price of which the company’s securities trade. Shareholders are
accordingly advised to continue to exercise caution when dealing in the company’s
securities until a full announcement is made.
Johannesburg
16 May 2014
Sponsor
Arcay Moela Sponsors Proprietary Limited
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