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Category 2 Transaction Announcement: Disposal of Assets by Enviro Crop Protection Pty Ltd to a Related Party
Ububele Holdings Limited
Incorporated in the Republic of South Africa
(Registration number: 1998/011074/06)
Share code: UBU
ISIN Code: ZAE000144739
(“Ububele” or “the Company”)
CATEGORY 2 TRANSACTION ANNOUNCEMENT: DISPOSAL OF ASSETS BY
ENVIRO CROP PROTECTION PROPRIETARY LIMITED TO A RELATED PARTY
1. THE TRANSACTION
Shareholders are hereby advised that Enviro Crop Protection
Proprietary Limited, a wholly-owned subsidiary of Ububele
(“the Seller”), has entered into an agreement with Rovic Agri
Proprietary Limited (“the Purchaser”), dated 21 July 2014
(“the Sale Agreement”), in terms of which the Seller will
dispose of certain registered products comprising
agrochemical registrations (“Sale Assets”), on the terms and
conditions set out below (“the Transaction”).
2. BACKGROUND INFORMATION ON THE PURCHASER
The Purchaser is a leading company active in the field of
agricultural machinery and irrigation.
3. RELATED PARTY TRANSACTION
As the Purchaser is a major shareholder of the Company, the
Transaction is regarded as a related party transaction in
terms of the Listings Requirements of the JSE Limited.
4. RATIONALE FOR THE TRANSACTION
The Seller wishes to dispose of the Sale Assets in order to
raise funds required for its business.
5. THE EFFECTIVE DATE OF THE TRANSACTION
Whilst ownership in the Sale Assets vests in the Purchaser
from delivery thereof to the Purchaser, the risks and
benefits in and to the Sale Assets will pass to the Purchaser
upon registration of the Sale Assets in the Purchaser’s name
(“Registration”).
6. CONDITIONS PRECEDENT
The Transaction is subject to the fulfillment or waiver of
the following outstanding conditions precedent (“Conditions
Precedent”):
6.1. approval of the Transaction by the Land Bank; and
6.2. approval of the Transaction by Chongqing Shining
Fine Chemicals Co Limited, a party with an existing
interest in the Sale Assets.
The Conditions Precedent have been inserted for the benefit
of both the Purchaser and the Seller and may be waived by
written agreement. Unless the Conditions Precedent are
fulfilled or waived by not later than 25 July 2014 (or such
later date as the Purchaser and the Seller may agree to in
writing), the Transaction will not be of any force or effect.
7. PURCHASE CONSIDERATION
7.1. The purchase consideration in terms of the Sale
Agreement is R6 237 145 (“Purchase Consideration”),
equal to the value of the Sale Assets as determined by a
valuation obtained by the Seller from an independent
valuator, plus value added tax thereon, if applicable.
7.2. The Purchase Consideration shall be paid by the
Purchaser in full against Registration.
8. LOAN FROM THE PURCHASER
8.1. As the date on which the Registration occurs
(“Registration Date”) may be delayed, the Purchaser has
agreed to advance an amount equal to the Purchase
Consideration to the Seller on the date on which the
Conditions Precedent have been fulfilled or waived
(“Loan”).
8.2. The Loan shall bear interest at the prime rate plus 1%
and shall be repayable by the Seller on the earlier of
the Registration Date or 31 December 2015, provided that
the Seller may, on 7 business days’ written notice to
the Purchaser, repay the entire amount outstanding under
the Loan at any time.
8.3. If the Loan or any part thereof (including interest)
remains outstanding on the Registration Date, the
Purchase Consideration will be set off against all
amounts owing by the Seller to the Purchaser in
connection with the Loan.
8.4. As security for the proper and timeous performance by
the Seller of all its obligations under the Loan, the
Seller will pledge and cede to the Purchaser all right,
title and interest whatsoever, including of a residual
or reversionary nature, which the Seller may have to and
in respect of the Sale Assets, together with all rights
of action thereunder, as well as to the Purchase
Consideration. Any exercise of the aforementioned pledge
and cession will be subject to shareholder and
regulatory approval (to the extent required).
9. WARRANTIES AND INDEMNITIES
The Transaction is subject to warranties and indemnities that
are normal for a transaction of this nature.
10. APPLICATION OF THE SALE PROCEEDS
The Loan and the Purchase Consideration shall be applied
towards the Seller’s working capital requirements.
11. PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTION
The pro forma financial effects of the Transaction are
presented for illustrative purposes only and because of
their nature may not give a fair reflection of the
Company’s financial position nor of the effect on future
earnings after the Transaction. The unaudited pro forma
financial effects have been prepared in accordance with the
Company’s accounting policies and in compliance with IFRS.
Set out below are the unaudited pro forma financial effects
of the Transaction, based on the unaudited published
interim financial results for the 6 months ended 31
December 2013. The directors of Ububele are responsible for
the preparation of the unaudited pro forma financial
information.
Unaudited Unaudited Change (%)
before the Pro Forma
after the
Transaction Transaction
(cents) (cents)
Basic earnings / (13.72) (13.26) 3%
(loss) per share
Basic headline (9.08) (8.62) 5%
earnings / (loss)
per share
Net asset value (9.04) (9.04) 0%
per share
Net tangible asset (53.93) (50.44) 6%
value per share
Notes and assumptions:
1. The basic loss per share and basic headline loss per share
figures in the “Unaudited Pro Forma after the Transaction”
column have been calculated on the basis that the
Transaction and the Loan were effected on 1 July 2013 and
the Purchase Consideration paid on 31 December 2013.
2. The net asset value per share and net tangible asset value
per share figures in the “Unaudited Pro Forma after the
Transaction” column have been calculated on the basis that
the Transaction and the Loan were effected on 31 December
2013 and the Purchase Consideration paid on 31 December
2013.
3. The taxation rate applicable is assumed to be 28%.
4. The basic loss per share and basic headline loss per share
figures are calculated based on weighted average number of
shares in issue of 178 382 824 on 31 December 2013.
5. The net asset value per share and net tangible asset value
per share have been calculated based on 178 382 824 shares
in issue at 31 December 2013.
6. The royalty fees referred to in paragraph 12.2. below were
not taken into account in the “Unaudited Pro Forma after
the Transaction” column on the basis that such a licensing
agreement is expected to only be concluded on or as soon
as possible after the Registration.
12. OTHER SIGNIFICANT TERMS OF THE TRANSACTION
12.1. For so long as any amount remains outstanding under
the Loan, the Seller is bound by certain negative
undertakings provided in favour of the Purchaser
that are normal for a transaction of this nature.
12.2. The Sale of Shares Agreement records that the Sale
Assets are subject to existing rights / terms of use
and / or licenses and the Seller and the Purchaser
undertake to do all things necessary, on or as soon
as possible after the Registration, to license the
use of the Sale Assets to the Seller at a royalty
equivalent to 3% of sales (excluding value added
tax).
13. CLASSIFICATION OF THE TRANSACTION
The Transaction is classified as a category 2 transaction in
terms of section 9 of the Listings Requirements.
23 July 2014
Cape Town
Designated Adviser
PSG Capital
Date: 23/07/2014 02:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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