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SPG - Super Group - Proposed Sale By Super Group Of Autozone And Further
Cautionary
SUPER GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1943/016107/06)
Share code: SPG
ISIN code: ZAE000011334
("Super Group")
PROPOSED SALE BY SUPER GROUP OF AUTOZONE AND FURTHER CAUTIONARY
1. Introduction
Further to the announcements released on 28 May 2009 and 30 July 2009,
shareholders are advised that Super Group and a consortium of investors led
by RMB Corvest ("the Purchaser") have signed an agreement in terms of which
the Purchaser will acquire the entire issued share capital of Partcorp
Holdings Limited ("AutoZone"), a 95% held subsidiary of Super Group ("the
Transaction").
2. Related party transaction
The Transaction represents a related party transaction as contemplated by
paragraph 10.1 of the JSE Limited Listings Requirements ("the Listings
Requirements") in that certain current and past directors of Super Group
subsidiaries and an associate of an advisor and significant lender of Super
Group are members of the Purchaser. In terms of the Listings Requirements,
a fairness opinion from an independent expert, acceptable to the JSE
Limited ("JSE"), is required for a related party transaction. Java Capital
(Proprietary) Limited ("Java") has therefore been appointed by the board of
directors of Super Group ("the Board") as the independent expert and will
consider the terms and conditions of the Transaction and whether such terms
and conditions are fair to Super Group shareholders. The full opinion of
Java and the basis for their opinion will be included in the circular to
Super Group shareholders referred to in paragraph 10 below.
3. Nature of business
AutoZone distributes and retails non-original Equipment Manufacturer parts
to the automotive aftermarket in the Southern African Development Community
("SADC") region through a national footprint of over 147 stores, of which
57 are member-owned (franchise) AutoZone branded stores. AutoZone stocks
and distributes one of the widest range of parts for passenger and
commercial vehicles in South Africa.
4. Rationale for the Transaction
The Board has resolved to consider the Transaction mainly as a consequence
of:
- the decision by the Board to implement a refocused strategy
resulting in the disposal of certain non-core assets; and
- the announcement of a recapitalisation and debt restructure
for Super Group (as released on SENS on 18 March 2009).
5. Purchase consideration
The purchase consideration is an aggregate of R435 000 000.00, payable as
follows:
- R400 000 000.00, in the proportions of the sellers being
Super Group Trading (Proprietary) Limited ("SGT"), Super
Group and Weirfield Investments Holdings (Proprietary)
Limited ("Weirfield") as set out in the sale of shares
agreement, on the third business day following the
effective date of the Transaction; and
- the remaining R35 000 000.00 ("the Deferred
Consideration"), in the sellers` proportions (as set out in
the sale of shares agreement), on 1 July 2012.
The R400 000 000.00 purchase consideration will attract interest at the
prime rate less 4.5% from 1 July 2009 until payment date, and the Deferred
Consideration is interest free.
The Purchaser will not take on or assume any liability owing by AutoZone or
its subsidiaries to Super Group`s operations in Mauritius or any other
inter-company loans or any outstanding tax liability of whatever nature,
and such liabilities are excluded from the Transaction and will be assumed
by Super Group. The Tradestream investment in RMB Global Solutions
(Proprietary) Limited held by AutoZone is excluded from the assets of
AutoZone and does not form part of the Transaction. In addition, Super
Group assumes responsibility for unwinding and settling the debtors`
securitisation arrangement to ensure that the AutoZone debtors are
unencumbered on the closing date of the Transaction. Any amounts to be paid
on behalf of Super Group to give effect to these exclusions shall be
considered a reduction of the purchase consideration proceeds.
The net cash proceeds after settlement of obligations related to the
abovementioned excluded items is expected to be R90 million. In accordance
with the provisions of the Super Group debt restructuring agreement, the
cash proceeds will be utilised to settle short-term debt.
6. Other terms of the Transaction
The Purchaser will remain liable for all obligations of the employees and
staff of AutoZone.
All assets (including the shares in and claims against AutoZone) shall be
delivered free of any encumbrances.
Super Group binds itself, jointly but not severally, in favour of the
Purchaser as surety for and coprincipal debtor in solidum with the other
sellers, being SGT and Weirfield, for the payment to the Purchaser of all
sums of money which the sellers may owe or be indebted to the Purchaser
arising from the sellers` obligations to the Purchaser in terms of the
Transaction.
Normal warranties for a transaction of this nature have been given, duly
qualified by the appropriate disclosures given.
Super Group will provide a 5-year non-compete restraint in the SADC region.
Super Group is however permitted to continue holding its existing interests
in parts sales and distribution.
7. Effective date
The effective date of the Transaction is the first business day of the
month following the month in which the last condition precedent is
fulfilled or waived.
8. Conditions Precedent
The Transaction is subject to, inter alia, the fulfilment or waiver of the
following conditions precedent:
- receipt of written confirmation from the parties to the
debtors` securitisation arrangement, that, upon receipt of
the amount outstanding in respect thereof, they shall
cancel the arrangement;
- approval of the Transaction by the Competition Authorities;
- receipt of all necessary regulatory, governmental or
similar clearances, approvals and decisions, including
approval from shareholders of Super Group and from the JSE
and the Securities Regulation Panel to the extent required;
- confirmation from Super Group`s financiers (other than in
terms of the Super Group debt restructuring arrangement)
that they will release AutoZone and/or its subsidiaries
from any undertakings, guarantees and/or any security
provided by it, for the obligations of Super Group;
- delivery of Annual Financial Statements of AutoZone for the
year ended 30 June 2009 to the Purchaser with reported
normalized EBITDA (R80 million) and net asset values
(R449,35 million) not being materially different to that
utilised by the Purchaser in performing its due diligence;
and
- confirmation from Super Group`s lenders under Super Group`s
debt restructure agreement that, subject to the payment of
the purchase consideration, with effect from the effective
date, AutoZone and its subsidiaries will no longer be a
party to the restructuring agreement undertaken by Super
Group and they will be released from all security granted
and possible liability thereunder.
9. Pro forma financial effects, forecast information and specific information
relating to the Transaction
Once the majority of the conditions are met and the pro forma financial
effects of the Transaction can be determined, the appropriate announcement
will be made by Super Group.
10. Transaction categorisation and circular to Super Group shareholders
The Transaction is a Category 1 transaction for Super Group in terms of the
Listings Requirements. A circular providing information on the Transaction
and a notice convening a general meeting of Super Group shareholders to
approve the Transaction, will be posted to Super Group shareholders in due
course.
11. Further cautionary announcement
Shareholders are advised to continue exercising caution until the detailed
financial effects of the Transaction are known.
12. Renewal of cautionary in respect of Super Group`s disposals
Shareholders are advised that negotiations with regard to the disposal of
the Emerald Insurance businesses and Super Group Industrial Products
inventory are still in progress which, if successfully concluded, may have
a material effect on the price of Super Group`s shares. Shareholders are
further advised that a further announcement in respect of the disposal by
Super Group of the business of Hermans will be made once the pro forma
financial effects have been determined.
Shareholders should therefore continue to exercise caution when dealing in
Super Group shares.
26 October 2009
Sandton
Financial advisor and Sponsor to Super Group
Deutsche Securities (SA) (Proprietary) Limited
Independent expert
Java Capital (Proprietary) Limited
Auditors and reporting accountants
KPMG Incorporated
Attorneys for Super Group
Fluxmans Attorneys
Attorneys for the Purchaser
McPherson Kruger Attorneys
Date: 26/10/2009 10:59:01 Supplied by www.sharenet.co.za
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