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GDF - Gold Reef Resorts Limited - Abridged revised listing particulars
Gold Reef Resorts Limited
(Incorporated in the Republic of South Africa)
Registration number 1989/002108/06
Share Code: GDF
ISIN: ZAE000028338
("Gold Reef" or "the Company")
ABRIDGED REVISED LISTING PARTICULARS
These Abridged Revised Listing Particulars are not an invitation to the public
to subscribe for or purchase shares in Gold Reef and are issued in compliance
with the Listings Requirements ("Listings Requirements") of the JSE Limited
("JSE") for information purposes only. The information contained in these
Abridged Revised Listing Particulars has been extracted from the revised listing
particulars issued by Gold Reef on 3 April 2010, and amended where appropriate
due to the elapsing of time.
Copies of the circular to Gold Reef shareholders dated 3 April 2010 (the
"Circular") detailing the terms of the proposed merger of the respective Tsogo
Sun Holdings (Proprietary) Limited ("Tsogo") and Gold Reef gaming and hotel
businesses through the acquisition by Gold Reef of the entire issued share
capital of Tsogo from Tsogo Investment Holding Company (Proprietary) Limited
("TIH") and SABSA Holdings (Proprietary) Limited ("SABSA") in exchange for the
issue of shares in Gold Reef to each of TIH and SABSA (the "Transaction") may
be obtained from the registered office of Gold Reef, Gate 4, Gold Reef City,
Northern Parkway, Ormonde, Johannesburg 2091, South Africa during normal
business hours, and are available on Gold Reef`s website:
www.goldreefresorts.com.
1 INTRODUCTION
Gold Reef shareholders are referred to the announcements published by Gold Reef
on the Securities Exchange News Service of the JSE Limited on 18 February 2010,
1 April 2010, 26 April 2010, 6 May 2010, 4 October 2010, 15 November 2010, 3
December 2010, 13 December 2010, 19 January 2011 and 11 February 2011 and as
well as the Circular.
Shareholders are advised that all the conditions precedent relating to the
Transaction have been fulfilled or waived (where appropriate). Accordingly, the
Transaction has become unconditional.
2 INCORPORATION AND HISTORY
Gold Reef was incorporated in South Africa as a public company on 4 December
1989 and was listed on the securities exchange operated by the JSE on 25 October
1994.
The merger of the respective gaming and hotel businesses of Gold Reef and Tsogo
will take effect on 24 February 2011 and will result in the existing Gold Reef
listing on the JSE being amended with effect from the commencement of business
on that date to reflect the enlarged issued share capital of Gold Reef and the
creation of the enlarged group as reconstituted post implementation of the
Transaction (the "Merged Entity"), further details of which are contained
herein. The Merged Entity is consequently repositioned as both a hotel and
gaming company with a new set of shareholders.
Upon implementation of the Transaction (or as soon as possible thereafter), it
is intended that the name of the Company will be changed to "Tsogo Sun Holding
Limited". Further details of the proposed change of name will be provided to
shareholders in due course.
3 THE BUSINESS OF THE MERGED ENTITY
The Merged Entity will be South Africa`s leading hotel, gaming and entertainment
company. The Merged Entity consists of two operating divisions, namely Gaming
and Hotels.
3.1 Gaming
The Merged Entity`s gaming operations consist of 14 casinos represented in 6 of
South Africa`s provinces.
The Merged Entity has an interest in the following resorts:
Casino Location % held
Montecasino Johannesburg, Gauteng 100.00%
Gold Reef City Johannesburg, Gauteng 100.00%
Silverstar Casino Johannesburg, Gauteng 100.00%
Suncoast Casino and Durban, Kwa-Zulu Natal 73.50%
Entertainment World
Golden Horse Casino Pietermartizburg, Kwa-Zulu 100.00%
Natal
Blackrock Casino Newcastle, Kwa-Zulu Natal 100.00%
The Ridge Casino Emalahleni (Witbank), 100.00%
Mpumalanga
Emnotweni Casino Nelspruit, Mpumalanga 100.00%
Goldfields Casino Welkom, Free State 100.00%
Caledon Casino, Hotel and Caledon, Western Cape 100.00%
Spa
Garden Route Casino Mossel Bay, Western Cape 85.00%
Mykonos Casino Langebaan, Western Cape 70.36%
Hemingways Casino East London, Eastern Cape 80.00%
Queens Casino Queenstown, Eastern Cape 25.10%
3.2 Hotels
Southern Sun Hotels was founded in 1969 with the Beverly Hills Hotel in
Umhlanga, and has grown to be the largest hotel group in South Africa, with
approximately 90 hotels and 14 438 rooms at the end of 2010.
The Southern Sun Hotel group operates in all market segments from deluxe to
budget, under a variety of brands including Southern Sun, Garden Court and
StayEasy, which principally service "people at work" which includes the key,
corporate, government, conference, airline and incentive segments of the market,
making up approximately 75% of revenue. Southern Sun is also the largest
timeshare operator in South Africa.
Internationally the group has expanded in Africa, Seychelles and the Middle East
and continues to look for new investment opportunities in these regions.
4 PROSPECTS FOR THE MERGED ENTITY
The Transaction was structured so as to enable Gold Reef shareholders and the
former Tsogo shareholders to benefit from the earnings, geographical and market
segment diversification achieved through exposure to the respective portfolios
of assets and income streams of Gold Reef and Tsogo.
Notwithstanding recent tough trading conditions, these businesses are well
positioned to benefit from anticipated medium term improving economic conditions
and increasing consumer spending across various regions in South Africa.
5 SHARE CAPITAL STRUCTURE
5.1 Authorised and issued share capital
The authorised and issued share capital of the Merged Entity after taking
account of the allotment and issue of the 888 261 028 Gold Reef shares (the
"Consideration Shares") issued to TIH (a 99.56% held subsidiary company of
Hosken Consolidated Investments Limited), and SABSA (an indirect wholly-owned
subsidiary of SABMiller plc) respectively, in consideration for the acquisition
of the entire issued share capital of Tsogo is:
R`000
Aut Authorised share capital
1 200 000 000 ordinary shares of 2 cents 24 000
each
24 000
Issued share capital
1 180 604 925 ordinary shares of 2 cents 23 612
each(a)
Share premium(b) 17 437 353
17 460 965
(a) Inclusive of 83 666 029 treasury shares.
(b) The share premium has been calculated based on the Gold Reef share price in
excess of par value on the last trading day prior to the fulfilment or
waiver (where appropriate) of the last of the conditions precedent
("Fulfilment Date").
Other than a maximum of 3 million Gold Reef shares placed under the control of
the directors of Gold Reef for the purpose of carrying out the terms of the Gold
Reef Share Scheme (as detailed in the Circular), the authorised but unissued
Gold Reef shares have not been placed under the control of the directors of Gold
Reef and such authorised unissued shares are under the control of the Gold Reef
shareholders in general meeting.
6 WORKING CAPITAL AND DIVIDEND POLICY
6.1 Working capital
The board of directors of Tsogo, which comprised a quorum of the then proposed
board of directors of the Merged Entity (the "Merged Entity Board"), at a
meeting held on 5 August 2010, confirmed that the working capital available to
the Merged Entity and its subsidiaries is sufficient for ordinary business
purposes for at least 18 months from the date of the directors` resolution
passed on 5 August 2010.
6.2 Dividend policy
A dividend cover of approximately 2x will be adopted as the targeted dividend
policy of the Merged Entity, which will be reviewed periodically taking into
account prevailing circumstances and future cash requirements and investment
opportunities.
7 DIRECTORS AND SENIOR MANAGEMENT
On the Closing Date (5 business days following the Fulfilment Date), the
following directors will be appointed to the Merged Entity Board and the current
Gold Reef directors will resign with effect from the Closing Date.
All directors are South African unless otherwise stated. The names, ages,
qualifications and functions in the Merged Entity of the directors of the Merged
Entity are as follows:
Name Designation/Capacity
Name:J A Mabuza Chief Executive Officer
Age: 53
Name: M N von Aulock Chief Financial Officer
Age: 37
Qualification(s):
CA(SA)
Name: R A Collins Executive Director
Age: 49
Qualification(s):
BCom (Legal), BCom Hons (Marketing), HDip Tax
Law, HDip Company Law
Name: G I Wood Executive Director
Age: 41
Qualification(s):
BCom, BCompt (Hon), CA(SA)
J A Copelyn Non-Executive Director,
Age: 60 Chairman of the Board
Qualification(s): and member of the
BCom (Hons B. Proc) Remuneration Committee
M J A Golding Non-Executive Director
Age: 50
Qualification(s):
BA(Hons)
A Van Der Veen Non-Executive Director
Age: 40
Qualification(s):
CA (SA), CFA
V E Mpande Non-Executive Director
Age: 52
Qualification(s):
Elec. Eng. (dip)
J M Kahn Non-Executive Director
Age: 71
Qualification(s):
BA(Law), MBA
D Com (hc), SOE
E A G Mackay Non-Executive Director
Age: 61 and member of the
Qualification(s): Remuneration Committee
BSc (Eng),B Com
M Wyman Non-Executive Director
Age: 65
Qualification(s):
CA(SA)
R Tomlinson Independent Non-
Age: 48 Executive Director,
Qualification(s): Lead Independent
Bachelor of Commerce, Higher Diploma in Director, Chairman of
Personnel Management, Stanford Executive the Audit and Risk
Programme Committee and a member
of the Remuneration
Committee
P J Venison Independent Non-
Nationality: Executive Director,
British Chairman of the
Age: 68 Remuneration Committee
Qualification(s): and member of the Audit
BA and Risk Committee
J Ngcobo Independent Non-
Age: 60 Executive Director and
member of the Audit and
Risk Committee and a
member of the
Remuneration Committee
8. PRO FORMA FINANCIAL EFFECTS ON GOLD REEF
The unaudited pro forma financial effects have been prepared for illustrative
purposes only, in order to provide information about how the Transaction might
have affected Gold Reef shareholders had the Transaction been implemented on the
dates indicated in the notes below.
Due to their nature, the unaudited pro forma financial effects may not fairly
present the financial position, changes in equity, results of operations, cash
flows or the effect of future earnings on the Merged Entity after the
Transaction.
The directors of Gold Reef are responsible for the preparation of the unaudited
pro forma financial information.
The table below sets out the unaudited pro forma financial effects of the
Transaction on Gold Reef shareholders based on the published unaudited interim
financial results of Gold Reef for the six months ended 30 June 2010.
Before the After the % Change
Transaction(1) Transaction(2
)
Attributable earnings per 39.0 14.3 (63.3%)(6)
Gold Reef share
(cents)(3)
Headline earnings per 39.2 35.3 (9.9%)(6)
Gold Reef share
(cents)(3)
Net asset value ("NAV") 925.4 595.3 (35.7%)
per Gold Reef share
(cents)(4)
Net tangible asset value 497.2 126.3 (74.6%)
("NTAV") per Gold Reef
share (cents)(4)
Weighted average number 276.2 1 096.6
of Gold Reef shares
(millions)(5)
Number of Gold Reef 276.5 1 096.9
shares in issue as at 30
June 2010 (millions)(5)
Notes:
1 Gold Reef "Before the Transaction" results were extracted from the
published, unaudited interim results of Gold Reef for the six months ended
30 June 2010 as released on SENS on 2 September 2010, and published in the
South African press on 3 September 2010. These results have not been
reviewed by the Company`s auditors.
2 Represents the pro forma financial effects of the Transaction, which have
been accounted for in terms of IFRS3 (revised): Business Combinations,
using the principles of reverse acquisition accounting.
3 Attributable earnings and headline earnings per Gold Reef share effects are
based on the following principal assumptions:
i the Transaction was effective on 1 January 2010;
ii Tsogo results represent the results of Tsogo for the six months ended 30
September 2010;
iii a fair value adjustment of the current shareholding of Tsogo in Gold Reef,
based on Gold Reef`s share price of R17.55 as at 16 February 2011, being
the last trading day prior to the Fulfilment Date. This results in the fair
value adjustment of the current Tsogo shareholding in Gold Reef being a
write-down of R229.8 million (after-tax effects), which adjustment is
excluded from headline earnings;
iv the recognition of the tangible and identifiable intangible assets is based
on a preliminary fair value exercise, with the carrying value of Gold
Reef`s land and buildings being estimated to be their fair value. In terms
of IFRS 3 (revised): Business Combinations, a fair value exercise will need
to be performed on the effective date of the Transaction;
v costs of R42.2 million (after-tax effects), which arise from the No Fault
Termination (as defined in the Service Agreements referred to in the
Circular) of the Executives` Service Agreements (as detailed in the
Circular), based on the assumption of the No Fault Termination (as defined
in the Service Agreements referred to in the Circular) being on 24 February
2011, and at Gold Reef`s share price of R17.55 as at 16 February 2011,
which are once-off in nature; and
vi Transaction costs of R60.8 million, which are once-off in nature.
4 NAV and NTAV per Gold Reef share effects are based on the following
principal assumptions:
i the Transaction was effective on 30 June 2010;
ii a fair value adjustment of the current shareholding of Tsogo in Gold Reef,
based on Gold Reef`s share price of R17.55 as at 16 February 2011, being
the last trading day prior to the Fulfilment Date. This results in the fair
value adjustment of the current Tsogo shareholding in Gold Reef being a
write-down of R229.8 million (after-tax effects), which adjustment is
excluded from headline earnings;
iii the recognition of the tangible and identifiable intangible assets is based
on a preliminary fair value exercise, with the carrying value of Gold
Reef`s land and buildings being estimated to be their fair value. In terms
of IFRS 3 (revised): Business Combinations, a fair value exercise will need
to be performed on the effective date of the Transaction;
iv costs of R42.2 million (after-tax effects), which arise from the No Fault
Termination (as defined in the Service Agreements referred to in the
Circular) of the Executives` Service Agreements (as detailed in the
Circular), based on the assumption of the No Fault Termination (as defined
in the Service Agreements referred to in the Circular) being on 24 February
2011, and at Gold Reef`s share price of R17.55 as at 16 February 2011,
which are once-off in nature;
v an increase of 971 014 Gold Reef shares as a result of the No Fault
Termination (as defined in the Service Agreements referred to in the
Circular) of the Executives` Service Agreements (as detailed in the
Circular), arising from the early exercise and vesting of existing options
in terms of the Gold Reef Share Scheme (as defined in the Circular), and
the settlement of the Executive`s loan accounts within the Gold Reef Share
Scheme (as defined in the Circular); and
vi Transaction costs of R60.8 million, which are once-off in nature.
5. The weighted average number of Gold Reef shares and Gold Reef shares in
issue "After the Transaction " are based on the issue of the Consideration
Shares and the additional Gold Reef shares (being the 383 333 unvested
and/or 971 014 share options of the Executives as at 30 June 2010) with
respect to the No Fault Termination (as defined in the Service Agreements
referred to in the Circular) of the Executives` Service Agreements (as
detailed in the Circular), less the Tsogo Sun Expansion Shares (as defined
in the Circular).
6. Excluding the effects of the once-off transaction costs of R60.8 million,
costs relating to the fair value adjustment of the current shareholding of
Tsogo in Gold Reef of R229.8 million (after-tax effects), and costs
relating to the No Fault Termination (as defined in the Service Agreements
referred to in the Circular) of the Executives` Service Agreements (as
detailed in the Circular) of R42.2 million (after-tax effects), the "After
the Proposed Transaction" earnings per Gold Reef share would be 44.7 cents
(14.6% increase), which includes the effects of the 2010 FIFA World Cup
which occurred in the period.
7. Excluding the effects of the once-off Transaction costs of R60.8 million
and costs relating to the No Fault Termination (as defined in the Service
Agreements referred to in the Circular) of the Executives` Service
Agreements (as detailed in the Circular) of R42.2 million (after-tax
effects), the "After the Transaction" headline earnings per Gold Reef share
would be 44.7 cents (14.0% increase), which includes the effects of the
2010 FIFA World Cup which occurred in the period.
8. The pro forma financial information has been prepared using the same
accounting policies as those applied in the unaudited interim financial
results for the period ended 30 June 2010.
Johannesburg
18 February 2011
Advisers to Gold Reef
Financial adviser and Sponsor
Deutsche Securities (SA) (Proprietary) Limited
Legal adviser
Edward Nathan Sonnenbergs Inc
Independent expert
Grant Thornton
Independent reporting accountants and auditors
PriceWaterhouseCoopers Inc
Advisers to Tsogo
Investment Bank
Investec Corporate Finance
Legal advisers
Tabacks
Competition law advisers
Nortons Inc
Date: 18/02/2011 08:30:01 Supplied by www.sharenet.co.za
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