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VUN - Vunani Limited - Acquisition And Further Cautionary
Announcement
Vunani Limited
(formerly Vunani Capital Holdings (Pty) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1997/020641/06)
(JSE code: VUN ISIN: ZAE000110359)
("Vunani" or "the company")
ACQUISITION OF:
- CERTAIN ASSETS PREVIOUSLY OWNED BY EXCHANGE SPONSORS (PTY)
LIMITED AND SME CORPORATE SOLUTIONS (PTY) LIMITED FROM WESSEL VAN
DER MERWE;
- 51% OF RETIREMENT FUND SOLUTIONS HOLDINGS (PTY) LIMITED; and
- FURTHER CAUTIONARY ANNOUNCEMENT
1. Introduction
1.1. Shareholders are advised that, further to the cautionary
announcement dated 28 November 2007 and the renewal thereof dated
9 January 2008, Vunani has entered into a heads of agreement with
Wessel van der Merwe, Esna Colyn, Henk Engelbrecht, Stef Greeff,
Martha van der Westhuizen, Stephen Barnett, Kim Van Es and Cindy Van
Der Knaap ("collectively the vendors") in respect of the acquisition
of certain business relationships, existing mandates, contracts and
the transfer of a team of JSE Limited ("JSE") approved executives
and senior management ("certain assets"), previously associated with
SME Corporate Solutions (Pty) Limited ("Corporate Solutions" or
"Corporate Solutions assets") and inter alia, Exchange Sponsors
(Pty) Limited ("Exchange Sponsors"), for a maximum purchase
consideration of R90 750 000, with effect from 1 January 2008 or
such later date as may be permissible in terms of International
Financial Reporting Standards ("the effective date").
1.2. The abovementioned management teams will become executives of
Vunani Corporate Finance, which has been approved by the JSE to act
as Sponsor and Designated Adviser, and Vunani Treasury Resources,
respectively.
1.3. Shareholders are further advised that Vunani has also entered
into an agreement with Chris du Plooy ("the RFS vendor") in respect
of the acquisition of 51% of the ordinary shares in and claims
against Retirement Fund Solutions Holdings (Pty) Limited ("RFS") for
a maximum purchase consideration of R48 960 000 ("the RFS
transaction") with effect from 1 March 2008 ("the effective date").
2. Background to the acquisition of the Corporate Solutions assets
2.1. Corporate Solutions, a privately owned business which is
primarily involved in corporate finance and advisory related
services and its 70% owned subsidiary, Exchange Sponsors and
Treasury Resources ("Treasury Resources"), a division of Corporate
Solutions which is primarily involved in treasury related
activities, was inter alia, founded by Wessel van der Merwe, Marius
Meyer and Stephen Barnett.
2.2. The management team of JSE approved executives who will become
executives of Vunani Corporate Finance are Wessel van der Merwe,
Henk Engelbrecht, Esna Colyn and Stef Greeff. In order to expand
the existing team, another approved JSE executive has accepted an
executive position at Vunani Corporate Finance.
2.3. The management team has been involved in more than 30 listings
on the JSE Main Board and Alternative Exchange ("ALTx"), as well as
large Black Economic Empowerment ("BEE") transactions, mergers,
acquisitions and various other corporate finance related
transactions.
2.4. The members of the management team, who will become executives
of Vunani Treasury Resources, are Stephen Barnett, Kim Van Es and
Cindy Van Der Knaap.
3. Background to the RFS transaction
3.1. The RFS business, a privately owned business, administers
pension funds with a combined membership of over 30 000, manages
home loans, provides financial advisory services and life insurance
benefits, and was established in 1987 by Chris du Plooy, the current
Chief Executive Officer ("CEO") of RFS.
3.2. Chris du Plooy, who is well known in the financial services
industry, is supported by an experienced management team. This
management team comprises of Gawie Cillie, Dirk du Plooy, Braam
Coetzee, Sean Samons and Ian van der Walt.
4. Terms of the acquisition of the Corporate Solutions assets
4.1. The maximum purchase consideration payable to the vendors for
the Corporate Solutions assets is R90.75 million which will be
discharged as follows:
- R12 million in cash;
- R57.25 million by way of the issue and allotment of 57 250 000
Vunani ordinary shares at an issue price of R1.00 (one Rand) per
ordinary share, being the market price at the time that the
transactions were agreed upon; and
- R21.5 million, which is dependent upon a warranted audited
profit after taxation of R19.5 million ("warranted PAT") being
achieved for the year ending 31 December 2008, by way of the issue
and allotment of 21 500 000 Vunani ordinary shares at an issue price
of R1.00 (one Rand) per ordinary share, being the market price at
the time that the transactions were agreed upon. This portion of
the purchase consideration will be adjusted on a pro rata basis in
the event that the warranted PAT is not met.
4.2. All members of the management team will become shareholders in
Vunani subsequent to the transaction. The ordinary shares to be
issued by Vunani to the management team will be "locked up" for a
period of three years from the effective date.
4.3. The management team will enter into written employment
contracts with Vunani incorporating restraint of trade clauses.
5. Terms of the RFS transaction
5.1. The maximum purchase consideration in terms of the RFS
transaction is R48.96 million which will be discharged as follows:
- R8 million will be paid in cash on the effective date ("First
Payment");
- R10 million will, subject to the warranty set out in 5.2
hereunder, be paid in cash within 30 days of receipt of the audited
annual financial statements for the year ended 29 February 2008.
Such sum will bear interest from the effective date to the payment
date at Standard Bank of South Africa Limited`s call account rate
("Second Payment");
- R30.96 million will, subject to the warranty set out in 5.2
hereunder, be paid in cash within 30 days of receipt of the audited
annual financial statements for the year ended 28 February 2009.
Such sum will bear interest from the effective date to the payment
date at Standard Bank of South Africa Limited`s call account rate
("Third Payment");
5.2. The RFS vendor has warranted PAT of R16 million for the year
ending 29 February 2008 and R16 million for the year ending
28 February 2009, respectively. To the extent that RFS does not
achieve the warranted PAT for either of these two years Vunani shall
have the right to either:
- apply a pro rata reduction of the purchase consideration, based
on a six times multiple; or
- within 20 days of receipt of RFS`s respective audited annual
financial statements, sell the 51% shares then held by Vunani in RFS
back to the RFS vendor for an amount equal to the purchase
consideration plus interest thereon at Standard Bank of South Africa
Limited`s call account rate but not exceeding the aggregate amount
of the First, Second and Third Payments.
5.3. In terms of the RFS transaction, RFS`s management team and all
team members will remain unchanged with Chris du Plooy as CEO.
5.4. The RFS vendor and key management of RFS will enter into
written employment contracts with Vunani incorporating restraint of
trade clauses.
6. Rationale for the acquisitions
The rationale for the acquisition of the Corporate Solutions
assets and RFS transactions is, inter alia, as follows:
- they will provide to Vunani the opportunity of strengthening
and growing its income base from its financial services operations;
- they will provide Vunani with the opportunity of providing
comprehensive corporate finance, treasury and insurance related
services to its current and future clients;
- Vunani will have the opportunity of generating further deal
flow and cross-selling opportunities to its existing business
divisions;
- Vunani`s platform as the leading BEE financial services group
will provide an excellent opportunity to the Vunani Corporate
Finance, Vunani Treasury and RFS teams to access new business
opportunities.
7. Conditions precedent to the acquisition of the Corporate
Solutions assets
7.1. The acquisition of the Corporate Solutions assets are subject
to, inter alia, the following conditions precedent:
- the completion of a due diligence to the satisfaction of
Vunani;
- the conclusion of final legal agreements.
7.2. The JSE has given formal approval for Vunani Corporate Finance
to act as a Sponsor and Designated Adviser.
8. Conditions precedent to the RFS transaction
The RFS transaction is subject, inter alia, to the following
conditions precedent:
- the completion of a due diligence to the satisfaction of
Vunani;
- approval of the transaction by the Competition Commission;
- the conclusion of final legal agreements including, but not
limited to, a shareholders` agreement; and
- the implementation of a dividend policy in terms of which RFS
will declare dividends of at least 50% of the audited profit after
taxation, subject to the working capital requirements of RFS.
9. Financial effects of the transactions
The financial effects will be released after the condensed
reviewed financial results of Vunani have been released for the
year ended 31 December 2007. It is expected that the condensed
reviewed financial results of Vunani for the year ended
31 December 2007 will be released during the week ending
29 February 2008. Shareholders will be notified once the
Vunani Corporate Finance, Vunani Treasury Resources and RFS
transactions become unconditional.
10. Further cautionary announcement
Given that the financial effects of the acquisitions cannot be
quantified as yet, shareholders are advised that caution is
still required to be exercised by them when dealing in their
securities. Shareholders are further advised that Vunani has
also entered into negotiations unrelated to the above
announcement, which if successfully concluded may have a
material effect on the price of the company`s securities.
Accordingly, shareholders are advised to continue exercising
caution when dealing in the company`s securities until a full
announcement is made.
Designated Adviser
Vunani Corporate Finance
Johannesburg
22 February 2008
Date: 22/02/2008 12:16:01 Supplied by www.sharenet.co.za
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