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Steers Holdings Limited - Acquisition Of Pleasure Foods Including Wimpy And

Release Date: 29/08/2003 15:10
Code(s): STE
Wrap Text

Steers Holdings Limited - Acquisition Of Pleasure Foods Including Wimpy And Whistle Stop Brands And Withdrawal Of Cautionary Announcement Steers Holdings Limited (Registration No.1969/004875/06) Share Code STE ISIN ZAE000008330 ("Steers Holdings" or "the company") ACQUISITION OF PLEASURE FOODS INCLUDING WIMPY AND WHISTLE STOP BRANDS AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT 1. Introduction Shareholders are referred to the announcement of 19 August 2003 regarding the company"s conditional acquisition of Pleasure Foods (Pty) Limited ("Pleasure Foods") for a price of R150 600 000, subject to certain adjustments. The funding of the purchase price is as follows: * R95 000 000 has been raised by Steers Holdings as medium term finance; * R20 600 000 will be funded out of Steers Holdings" cash resources and facilities; and * R35 000 000 will be raised through a vendor consideration placement of 22 580 645 Steers Holdings shares to be issued at R1,55 each and placed at the same price with parties who have irrevocably undertaken to acquire them on this basis. These parties include some existing shareholders and directors of Steers Holdings. 2. Financial effects of the acquisition The pro forma financial effects of the acquisition on historical earnings, headline earnings, net asset value and tangible net asset value per Steers Holdings share set out in the table illustrate how the acquisition may have impacted on Steers Holdings. Because of their nature, the pro forma financial effects may not fully reflect the effect of the acquisition on Steers Holdings" future earnings. Per share Per share Change Cents Cents after before acquisition % acquisition
Historical earnings 25.07 1 22.49 2 (10.29) Historical headline 25.80 1 29.53 3 14.46 earnings Historical fully diluted 25.80 1 28.63 4 10.97 headline earnings Historical net asset 91.50 1 103.08 5 12.66 value Historical tangible net 48.87 1 (63.53) 6 (230.00) asset value The decrease in the historical earnings per Steers Holdings share results from the amortisation of goodwill, arising from the acquisition, over twenty years (the "goodwill adjustment"). The historical headline earnings per Steers Holdings share, which excludes the goodwill adjustment, indicates the positive effect the acquisition has on the historical results of Steers Holdings. In addition, the acquisition is enhancing on the net asset value of Steers Holdings. The historical tangible net asset value decrease is a consequence of excluding the value of Steers Holdings" intangible assets comprising, principally, the Steers, Debonairs, Fishaways, Church"s Chicken, Wimpy and Whistle Stop brands. Notes: 1The historical earnings, headline earnings, fully diluted headline earnings, net asset value and net tangible asset value per Steers Holdings share as set out in the before acquisition column of the table are based on Steers Holdings" audited results for the year ended 28 February 2003. 2The historical earnings per Steers Holdings share as set out in the after acquisition column of the table is based on the assumption that the acquisition took effect on 1 March 2002 and was funded by the requisite borrowings (raised in respect of the acquisition and costs), cash and the issue of Steers Holdings shares on that date. The net income before taxation and interest of Pleasure Foods for the year ended 30 June 2003 (the "Pleasure Foods income") has been adjusted to exclude all transactions involving Milky Lane and Juicy Lucy occurring during that year. Interest on the borrowings has been raised at 13.86%, while interest on the net own cash resources paid out by Steers Holdings has been accounted for at prime (collectively the "interest charge"). Taxation at a rate of 30% was raised on the Pleasure Foods income after the deduction of the interest charge. The required goodwill adjustment has been raised. 3The historical headline earnings per Steers Holdings share as set out in the after acquisition column of the table was undertaken on the same basis as the historical earnings calculation but excludes the goodwill adjustment. 4The historical fully diluted headline earnings per Steers Holdings share as set out in the after acquisition column of the table was undertaken on the same basis as the historical headline earnings calculation and adjusts for the effect of R9 million of the medium term funding converting to equity at the election of the debt provider at the end of five years. The conversion is assumed to take place at R1,55 per Steers Holdings share. 5The historical net asset value per Steers Holdings share as set out in the after acquisition column of the table is based on the assumption that the acquisition took effect on 28 February 2003 and was funded by the requisite borrowings (raised in respect of the acquisition and costs), cash and the issue of Steers Holdings shares on that date. The Pleasure Foods balance sheet at 30 June 2003 has been utilised for the purposes of the calculation. 6The historical net tangible asset value per Steers Holdings share as set out in the after acquisition column of the table was undertaken on the same basis as the historical net asset value calculation but excludes all intangible assets. 3. Conditions precedent to the acquisition One of the conditions precedent to the acquisition, the consent of existing debt providers to Pleasure Foods, has been fulfilled. 4. Withdrawal of cautionary Steers Holdings" shareholders are no longer required to exercise caution in their dealings in Steers Holdings shares. Johannesburg 29 August 2003 Corporate advisor and sponsor to Steers Holdings Java Capital Legal advisor to Steers Holdings H R Levin and Associates Debt providers to Steers Holdings Investec Bank Limited Reporting Accountants Fisher Hoffman PKF (Jhb) Inc. Legal Advisor to Ethos private Equity Fund (iii) and Pleasure Foods Webber Wentzel Bowens Date: 29/08/2003 03:10:41 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department

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