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Disposal of Secequip and renewal of cautionary
AMALGAMATED ELECTRONIC CORPORATION LIMITED
(“Amecor”) or (“the company”)
(Incorporated in the Republic of South Africa)
(Registration number: 1997/010036/06)
Share code: AER ISIN: ZAE 000070587
DISPOSAL OF THE SECEQUIP BUSINESS AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Shareholders are referred to the cautionary announcement dated 11 March 2014 and the
subsequent renewal thereof dated 24 April 2014 wherein shareholders were advised that the
company had entered into discussions with separate parties regarding a potential acquisition
(“acquisition”) by the Company and a potential disposal of a group asset.
Amecor hereby announces that its 79% held subsidiary, Secequip Proprietary Limited,
(“Secequip” or “seller”) has entered into an agreement with Divine Inspiration 579 Proprietary
Limited, (“DI 579” or “purchaser”) to sell, as a going concern, the Secequip business consisting of
inter alia fixed assets, cash deposits, inventory (comprising stock and slow moving stock),
customers, continuing contracts, goodwill, as well as the employee liabilities, but excluding
debtors and certain liabilities, subject to the fulfilment of the condition precedent set out in
paragraph 4 below (“the transaction”). The proceeds from the transaction is an estimated R30
million.
2. Rationale for the disposal of the Secequip business
Amecor’s market leading operations are focused on making it safe to live and do business by
providing key products and services of a strategic nature to the security industry in South Africa
and increasingly into Africa.
Secequip is an importer and wholesale distributor of security products within the Amecor
Group.
Amecor has reviewed the strategic fit of Secequip in the Amecor group and decided to dispose
of the Secequip business as it sharpens its strategic focus on businesses that generate superior
free cash flow, deliver attractive margins and provide good prospects for growth.
The disposal of Secequip will furthermore improve the quality of Amecor’s free cash flow.
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3. Consideration for the transaction
Subject to the fulfilment of the condition precedent set out in paragraph 4 below, Secequip will
dispose of certain business assets and liabilities to DI 579 with effect from the effective date.
The final purchase consideration will be determined on or about the third business date prior to
the effective date following a stock take at which each of the parties will be entitled to be
present. It is expected that the purchase consideration will not exceed R30 million and that the
final consideration payable will not vary materially from this estimate. Shareholders will be
advised of the final purchase consideration in a further announcement (“further
announcement”).
The purchase consideration shall be discharged by the purchaser -:
3.1 paying an amount of R600 000 on the effective date, which is an amount equal to the
approximate value of the fixed assets plus the approximate value of the cash deposits less
the approximate value of the employee liabilities;
3.2 paying Secequip an amount on or before the last business day of each month commencing
on the last business day of the second month following the effective date and for 10 months
thereafter until the purchase price of the stock has been discharged in full.
3.3 discharging the balance of the purchase price payable for the slow moving stock, being an
amount of R3 000 000, less an amount equal to the amounts received for the slow moving
stock during the period commencing on 21 February 2014 and the effective date by paying
the seller an amount of R500 000 per month on or before the last business day of each
month commencing on the thirteenth month following the effective date until the purchase
price in respect of the slow moving stock has been discharged in full.
4 Condition precedent
The sale of business agreement is subject to the shareholders of Secequip passing the necessary
resolution to enable the seller to conclude the transaction set out in the agreement by no later than
31 July 2014.
5 Effective date
The effective date of the transaction is the later of the first day of the month following the month in
which the condition precedent is fulfilled, and the thirty first day after publication in terms of
section 34 of the Insolvency Act falls.
6 Unaudited pro forma financial effects
Based on the estimated maximum purchase consideration of R30 million, the pro forma financial
effects of the transaction on Amecor’s earnings per share, headline earnings per share, net asset
value per share and net tangible asset value per share are not significant and have, therefore, not
been disclosed.
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The value of the net assets subject to the transaction will be determined on or about the effective
date and the profits attributable to the net assets that are the subject to the transaction will be
disclosed in the further announcement.
The cash proceeds of the transaction will be used to discharge financial obligations within Secequip.
7. Categorisation
Based on the estimated maximum consideration of R30 million, the transaction is a Category 2
transaction in terms of the JSE Limited Listings Requirements. Shareholders will be advised of the
final categorisation of the transaction in the further announcement.
8. Renewal of cautionary announcement
Further to the information in this announcement regarding the transaction, shareholders are
advised that the company remains in discussions with a separate party regarding a potential
acquisition. The successful conclusion of the acquisition may have an effect on the price of the
company’s securities.
Accordingly shareholders are advised to exercise caution when dealing in Amecor shares until the
further announcement is made and an announcement regarding the acquisition is made.
Johannesburg
16 May 2014
Sponsor Legal Advisor
Sasfin Capital HR Levin Attorneys, Notaries and Conveyancers
(A division of Sasfin Bank Limited)
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