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Proposed Category 1 Disposal Of Businesses And Withdrawal Of Cautionary Announcement
Invicta Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1966/002182/06)
Ordinary Share code: IVT Ordinary Share ISIN: ZAE000029773
Preference Share code: IVTP Preference Share ISIN: ZAE000173399
(“Invicta” or “the Company”)
PROPOSED CATEGORY 1 DISPOSAL OF BUSINESSES AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT
1. Proposed disposal
Invicta stakeholders are hereby advised that the Company and its wholly owned subsidiary,
Humulani Marketing Proprietary Limited, which forms part of the Capital Equipment Group
(“CEG”) reporting segment, (or the "Seller") has entered into an agreement ("Agreement")
dated 17 July 2020 ("Signature Date") with CNH Industrial SA Proprietary Limited (the
"Purchaser” or “CNHi”), to dispose of four businesses within CEG, for a cash consideration
equal to the tangible net asset value (“NAV”) of the operations on the effective date, being
approximately R507 million excluding interest bearing debt as at 31 March 2020 (“NAV
Consideration”), plus an additional US$6 million goodwill (together the "Disposal
Consideration") (the "Disposal"). The Disposal will become effective on the later of 1 January
2021 or once the necessary regulatory approvals and outstanding suspensive conditions have
been met (“Effective Date”).
2. Rationale
The rationale for the Disposal is for CNHi to continue with its strategy of having a direct
operational footprint and infrastructure in South Africa for the selling of world class products in
both South Africa and the southern African market. The rationale for Invicta is to apply the
Disposal Consideration in the short-term, to reduce the most expensive debt of the Group,
hereby realigning its funding and enabling the Company to focus on other strategic initiatives
and its core operations.
3. Description of businesses
The four businesses that are the subject matter of the Disposal comprise the following:
• Landboupart – a distributor of replacement spare parts for the agricultural and
industrial markets for brands such as Massey Ferguson, Landini, John Deere, Perkins,
IH (Melrose) and Carraro. Landboupart supplies a wide range of quality agricultural
spare parts ranging from tractor parts, engine parts, filters and drivetrains, to planters
parts.
• Northmec – a supplier of farming equipment in South Africa, distributing a full range of
agricultural machinery, implements and related original equipment manufacturers
(“OEM”) spare parts for brands such as Case IH, and many other quality internationally
known brands. Northmec’s product range includes tractors, mowers, combine
harvesters, windrowers, cultivators, grain/corn headers, balers, ploughs and sprayers.
• CSE – engaged in the distribution of Case earthmoving and construction equipment,
turf-grooming machinery, utility vehicles and related OEM spare parts. CSE
specialises in distributing, inter alia, Case and Dynapac branded equipment, including
tractor loader backhoes, skid steer loaders, tele-handlers, crawler excavators, front
end loaders and graders.
• NHSA - NHSA is a supplier of OEM and Non-OEM spare parts for brands such as Fiat,
Ford, Braud, Carraro and NewPart. NHSA’s product range includes tractor parts,
combine harvester parts, baler parts, grape harvester parts and axle parts.
4. Disposal consideration
The NAV Consideration is based on the NAV of the target businesses is payable as follows:
1. 1/3 of the proceeds on completion of the closing accounts;
2. 1/3 of the proceeds within 60 days of completion of the closing accounts; and
3. 1/3 of the proceeds within 90 days of completion of the closing accounts.
The additional consideration of US$6 million will become due and payable as follows:
1. US$1 million on the Effective Date;
2. US$2 million within two years of the Effective Date; and
3. US$3 million within three years of the Effective Date.
The Disposal Consideration will be interest bearing, other than the additional US$6 million,
and will be guaranteed by way of a corporate guarantee issued by CNHi NV in favour of Invicta.
Further to this, the Purchaser has the right to settle the full NAV Consideration immediately on
the Effective Date, and as a consequence no interest will be applicable.
5. Suspensive conditions
Suspensive conditions to be fulfilled within 6 months of signature date include:
1. Competition Commission and any other regulatory approval;
2. Shareholder and board approval of both the Purchaser and Invicta; and
3. Approval to transfer operational contracts and leases to the Purchaser.
6. Financial information
The unaudited estimated earnings before interest, tax, depreciation and amortisation
(“EBITDA”) of the Seller forgone by the Disposal equates to approximately R104 million for the
year ended 31 March 2020 and the Disposal Consideration will be used in the short term to
reduce the most expensive debt of the Group.
The unaudited profit after tax of the subject matter of the Disposal for the year ended 31 March
2020 is approximately R83 million, prepared on an International Financial Reporting Standards
(“IFRS”) basis.
The unaudited NAV of the subject matter of the Disposal as at 31 March 2020 is approximately
R507 million, prepared on an IFRS basis.
The Directors are satisfied with the quality of the management accounts which are used in this
paragraph.
The Agreement provides for a material adverse change, which allows CNHi to terminate the
Agreement if –
a. the NAV is less than R433 million or greater than R633 million at the closing
accounts date; or
b. if agreed sales targets are not achieved in the interim period.
Normal warranties for a transaction of this nature will be provided by Invicta.
7. Classification
The Disposal is a Category 1 transaction in terms of the JSE Limited (“JSE”) Listings
Requirements, and is subject to Invicta’s shareholder approval. A circular, containing the full
details of the proposed Disposal, incorporating a notice convening a shareholders meeting to
shareholders will be issued in compliance with paragraph 9.20 (b) of the JSE Listings
Requirements in due course. The salient dates and times of the proposed Disposal, including
the date of the shareholders meeting, will also be announced on SENS at the time of
distributing the circular.
8. Withdrawal of cautionary announcement
Shareholders are referred to the Cautionary Announcement released on SENS on 4 February
2020, last renewed on 15 June 2020, and are advised that the Company is not pursuing any
further asset disposals at this time. Shareholders are therefore no longer advised to exercise
caution when dealing in the Company’s securities.
Johannesburg
20 July 2020
Company Secretary: Lize Dubery
Sponsor: Deloitte & Touche Sponsor Services (Pty) Ltd
Attorneys: Bernadt Vukic Potash and Getz Attorneys
Date: 20-07-2020 07:05:00
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