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Detailed Cautionary Announcement Relating to the Potential Acquisition of Force Fuel and Force Fuel Properties
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
DETAILED CAUTIONARY ANNOUNCEMENT RELATING TO THE POTENTIAL ACQUISITION OF FORCE FUEL
PROPRIETARY LIMITED AND FORCE FUEL PROPERTIES PROPRIETARY LIMITED
1. Background
Shareholders are advised that Labat has agreed high level terms with the shareholders of Force Fuel
Proprietary Limited (“Force Fuel”) and Force Fuel Properties Limited (“FFP”) (“the Sellers”), in terms of
which Labat will acquire the business assets and liabilities of Force Fuel and FFP. (“the Acquisition”) in
return for the issue of 30 000 000 shares at R1.00 per share in Labat. The shareholders for Force Fuel
and FFP comprise Chronos Logistics Services (Pty) Ltd and Main Street 1384 (Pty) Ltd, which in turn are
owned by several shareholders, the largest shareholders being the Bakubung Share Trust (associated
with Tebogo Mogapi) and SG Share Trust (associated with Melvin Watkins) holding 21.67% each.
2. Description of Force Fuels and FFP
Force Fuel is a company which specializes in the sales and distribution of bulk fuel products in and
around the province of Gauteng. Fuel transportation is facilitated by an extensive fleet of tanker
trucks and there is no upper limit on order quantities.
FFP is a property holding company from which Force Fuel operates.
3. Rationale for the Acquisition
The Acquisition will assist Labat in its quest to become a major player in the logistics and distribution
business. In addition, the Acquisition will further contribute towards Labat’s BBEEE rating.
4. Suspensive conditions
The Acquisition is subject to the fulfilment of the following suspensive conditions:
- The parties executing a sale agreement/s in respect of Force Fuel and FFP and the
agreement/s becoming unconditional. The sale agreement/s will contain the normal
warranties and indemnities associated with a transaction of this nature;
- Labat advising the Seller in writing that it is satisfied with the outcome of the required due
diligence investigation;
- That both Messrs Tebogo Mogapi and Gorden Walters join the executive team of Labat in the
positions of Executive Director and Financial Director respectively;
- The Board providing a certified extract of the Board resolution approving the Acquisition;
- Any regulatory approvals to the extent required; and
- Any approval in connection with the admission to listing of the Labat shares on the JSE, issued
as payment of the Purchase Price.
5. Classification of the transaction
The Acquisition is classified as a Category 2 transaction in terms of the JSE Listings Requirements.
Force Fuel, FFP and its associates are not related parties to Labat. Accordingly, shareholder approval
is not required.
6. Financial Information
As per the latest audited financial statements for the year ended 30 June 2017, of Force Fuel, the
consolidated salient financial information were as follows:
- Net asset value of R 2 924 237;
- Turnover of R 290 281 550;
- Normalised EBITDA of R 18 121 866; and
- Loss after taxation of R2 075 763.
Post the implementation of the Transaction, Labat will participate in 100% of the earnings and net
asset value of Force Fuel.
As per the latest audited financial statements for the year ended 30 June 2017, of FFP, the
consolidated salient financial information were as follows:
- Net asset value of R 316 459;
- Turnover of R 1 097 620;
- EBITDA of R 736 876; and
- Profit after taxation of R 316 359.
Post the implementation of the Transaction, Labat will participate in 100% of the earnings and net
asset value of FFP.
The year end of Force Fuel and FFP is 30 June each year and the period ended 30 June 2017 was the
first period of operation for both companies. The information was prepared in accordance with
International Financial Reporting Standards and was extracted from the audited annual financial
statements for the 15-month period ended 30 June 2017 and the management accounts for the
period ending 28 February 2018.
Ambot Fuel Agencies CC previously owned the business and properties of Force Fuel and FFP, which
has been in operations for more than 24 years. Force Fuel acquired the business and properties from
Ambot Fuel Agencies CC in December 2016.
As per the latest audited financial statements for the year ended 31 May 2016, of Ambot Fuel
Agencies CC, the consolidated salient financial information were as follows:
- net asset value of R 59 875 030
- Turnover of R 851 686 905 and
- EBITDA of R 36 954 757,
The Force Fuel and FFP 2017 FY audited results only relate to a 6-month trading period from 1 January
2017 to 30 June 2017.
7. Renewal of cautionary announcement
Due to the suspensive conditions, which include the execution of formal legal agreements and a
due diligence, shareholders are advised to continue to exercise caution until a further
announcement is made. In addition, Labat remains in discussions relating to other acquisitions,
which, if successfully concluded, may have a material effect on the price of the Company’s
securities.
1 June 2018
Johannesburg
Sponsor
Arbor Capital Sponsors Proprietary Limited
Date: 01/06/2018 04:22:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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