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MZR - Mazor Group Limited - Acquisition By Mazor Of The Entire Issued Share
Capital Of And Claims Against COMPASS GLASS (Pty) Limited and withdrawal of
cautionary announcement
Mazor Group Limited
(formerly Main Street 590 (Pty) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2007/017221/06)
Share code: MZR ISIN: ZAE000109823
("Mazor" or "the company")
ACQUISITION BY MAZOR OF THE ENTIRE ISSUED SHARE CAPITAL OF AND CLAIMS AGAINST
COMPASS GLASS (PTY) LIMITED AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1 Introduction
Further to the cautionary announcement dated 15 May 2008, shareholders are
advised that Mazor has entered into an agreement with the shareholders of
Compass Glass (Pty) Limited ("Compass Glass"), dated 3 June 2008, ("the
agreement"), in terms of which Mazor will acquire the entire issued share
capital of and claims against Compass Glass with effect from 1 July 2008.
("the transaction")
2 Compass Glass
Compass Glass` business involves the beneficiation, fabrication and
distribution of glass, including the manufacturing of laminated and
toughened safety glass as well as double glazed units.
Compass Glass is owned by the ATI Trust, the Elma Trust and Stephen
Patrick Simons, collectively, ("the vendors").
3 Rationale for the transaction
The acquisition of Compass Glass further expands Mazor`s newly developed
glass division taking advantage of a segment within the construction sector
where much opportunity exists. The move into the niche glass market is in
line with one of Mazor`s listing strategies of diversifying the Mazor product
offering. By leveraging off Mazor`s market knowledge, reputation and procurement
advantages the acquisition of Compass Glass is expected to complement Mazor`s
existing business units.
4 Overview of the transaction
4.1 Details of the transaction
4.1.1 Acquisition consideration
In terms of the agreement, the maximum acquisition consideration payable is
R50 million and this amount will be payable in two instalments:
The first instalment is payable on the third business day immediately
following the date all the conditions precedent are fulfilled and will comprise
the following:
- repayment of shareholder loans as at 30 June 2008 to the ATI Trust and the
Elma Trust in cash;
- R2 million cash payable to the ATI Trust;
- R2 million cash payable to the Elma Trust; and
- 347 222 ordinary shares in Mazor to Stephen Patrick Simons, based on
the 30-day volume weighted average price on 1 June 2008, being R2.88
per share.
The second instalment will be calculated by multiplying Compass Glass`
annualised audited profit after tax (excluding extraordinary items, such as
share-based payment charges) calculated from the effective date to 28 February
2009 by 5, less the first instalment, up to a maximum of R50 million.
The second instalment is payable in cash to the ATI Trust and Elma Trust,
while Stephen Patrick Simons will be paid half in cash and half in new ordinary
shares of Mazor. The number of Mazor shares to be issued to Stephen Patrick
Simon in terms of the second instalment will be based on the higher of R2.88
per share or the 30-day volume weighted average price at 28 February 2009. The
second instalment is payable 5 days after the finalisation of the Mazor annual
financial statements for the year ending 28 February 2009, but no later than
30 May 2009.
Any Mazor shares received by the vendors as part of the settlement of the
acquisition consideration will be subject to a lock-in period of 2 years from
the date of issue.
4.1.2 Conditions precedent
The implementation of the transaction will be subject to approval by Mazor
shareholders at a general meeting.
4.1.3 Warranties
The transaction agreement provides for warranties from the vendors that are
normal for a transaction of this nature.
5 Articles of association
Pursuant to the transaction, Compass Glass will become a subsidiary of Mazor.
In accordance with paragraph 9.16 of the Listings Requirements, the articles
of association of Compass Glass will be amended to conform to Schedule 10 of
the Listings Requirements.
6 Financial Effects
Set out in the table below are the unaudited pro forma financial effects of
the transaction on Mazor`s audited results for the year ended 29 February 2008
(in respect of the net asset value and net tangible asset value) and the
forecast for the year ending 28 February 2009 as published in the prospectus
dated 8 November 2007 (in respect of earnings and headline earnings per share).
The unaudited pro forma financial effects are presented for illustrative
purposes only, to provide information on how the transaction may have impacted
or will impact on the results and financial position of Mazor. The unaudited
pro forma financial effects are the responsibility of Mazor`s directors. Due
to the nature of the unaudited pro forma financial effects, they may not fairly
present Mazor`s financial position and the results of its operations after the
transaction.
Before the After the Percentage
transaction transaction change
Earnings per share 44.0 54.9 24.7
(cents)
Headline earnings per 44.0 54.9 24.7
share (cents)
Net asset value per 119.3 119.6 0.3
share (cents)
Net tangible asset 119.3 78.4 (34.3)
value per share (cents)
Total number of issued 122 500 000 123 020 833
shares
Weighted average number 122 500 000 122 847 222
of shares
Notes:
1 The earnings per share and headline earnings per share "before the
transaction" column are based on the forecast of Mazor for the year
ending 28 February 2009 as published in the prospectus dated 8 November
2007.
2 The net asset value and net tangible asset value per share are based on
the audited results for Mazor for the year ended 29 February 2008 and the
reviewed management accounts for Compass Glass as at 30 April 2008.
3 The earnings per share and headline earnings per share in the "After the
transaction" column includes the reviewed forecast of Compass Glass for the
8 months ending 28 February 2009 annualised to reflect a 12 month period.
4 The earnings per share and headline earnings per share in the "before the
transaction" column assumes pro rata interest saving and interest earned
(assumed at 8%) from proceeds of the private placement. This interest is
reversed in the "After the transaction" column to reflect cash paid to the
vendors.
5 These financial effects assume the maximum purchase consideration of R50
million was settled in full on 1 July 2008 and the new shares issued to the
vendors in terms of the agreement were issued at R2.88 each, being the 30
day volume weighted average price of Mazor on 1 June 2008, a total of 520
833 Mazor shares.
6 The weighted number of shares in issue is calculated on the assumption that
additional new shares will be issued to the vendors in terms of the
agreement, all shares are assumed to be issued on 1 July 2008.
7 The accounting policies applied in the reviewed forecasts for Compass
Glass are consistent with those applied by the Mazor group during the past
financial year.
8 Purchase Price Allocations (per IFRS 3) relating to the transaction have
not been taken into account in the above calculations.
7 Related party transaction
The ATI Trust and the Elma Trust were established for the benefit of Liat
Mazor and/or members of her family and Ronnie Mazor and/or members of his
family respectively and are material shareholders of Mazor. In addition, Liat
Mazor and Ronnie Mazor are executive directors of Mazor. In this regard, the
transaction is classified as a related party transaction in terms of the
Listings Requirements of the JSE Limited ("Listings Requirements"). An
independent sub-committee of the board of Mazor will appoint an independent
expert to provide a fairness opinion, in terms of the Listing Requirements.
8 Withdrawal of cautionary announcement
As details pertaining to the transaction have been announced, shareholders are
no longer required to exercise caution when dealing with Mazor`s shares. The
cautionary announcement released on 15 May 2008 is hereby withdrawn.
9 Circular
In terms of the Listings Requirements, the acquisition is classified as a
related party transaction. A circular to shareholders setting out full details
of the acquisition and incorporating a notice convening a general meeting to
consider and, if deemed appropriate, to approve the transaction will be
circulated to shareholders within 28 days following the date of this
announcement.
Cape Town
5 June 2008
Designated Advisor: Bridge Capital Advisors (Pty) Limited
Legal Advisors: Webber Wentzel
Date: 05/06/2008 16:56:01 Supplied by www.sharenet.co.za
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