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SPG - Super Group - Introduction of New Strategic Partner for SG Fleet
Super Group Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1943/016107/06)
ISIN: ZAE000011334
Share code: SPG
("Super Group")
INTRODUCTION OF NEW STRATEGIC PARTNER FOR SG FLEET
1. Introduction and overview of the Transaction
Super Group has concluded an agreement with CHAMP Ventures Pty Limited ("CHAMP
Ventures"), one of Australia`s leading private equity firms, specialising in
growth companies in the Australasian market.
Pursuant to the agreement, funds managed by CHAMP Ventures ("CV Funds"), along
with key members of the senior management team ("Management") of Super Group`s
Australian subsidiary, SG Fleet Pty Limited ("SG Fleet"), will become
shareholders in SG Fleet.
At present, the shares in SG Fleet are held as to 71.5% by Super Group and 28.5%
by a minority shareholder, Dufour Investment Holdings Limited ("Dufour").
Immediately prior to the implementation of the agreement with CHAMP Ventures,
Super Group will acquire all of Dufour`s shares in SG Fleet and will
consequently hold all of the issued shares in SG Fleet, through a new holding
company, SG Fleet Holdings Pty Limited ("SGFH").
Under the terms of the agreement, CV Funds will acquire from Super Group 45.22%
of the redeemable preference shares and 41.36% of the ordinary shares in the
capital of SGFH, and Management will acquire from Super Group 8.54% of the
ordinary shares in SGFH.
At completion of the transaction, Super Group will hold 50.10% of the ordinary
shares and 54.78% of the redeemable preference shares of SGFH.
The disposals by Super Group to Management and CV Funds are inter-dependent.
CHAMP Ventures and CV Funds are at arm`s length from Super Group, with no prior
transactions having taken place between those parties.
The above transactions are collectively defined as the "Transaction".
2. Nature of business
SG Fleet is a leading provider of fleet management and salary packaging services
to corporate and government customers across a broad range of industry sectors
in Australia, New Zealand the United Kingdom.
From fully maintained operating lease/contract hire solutions and pure fleet
management services for corporate, government and small to medium businesses,
through to salary packaging and novated leases for individuals, SG Fleet
delivers world class solutions through best of breed products, services and
systems as well as streamlined and efficient processes.
SG Fleet prides itself on developing and maintaining strong, long-term
relationships with clients, motor dealers, manufacturers and suppliers.
3. Consideration
The total cash consideration to be received by Super Group amounts in aggregate
to AUSD39.0 million (equivalent to ZAR273.00 million at the rate of exchange
prevailing on 9 April 2011) made up as follows:
* AUSD35.5 million from CV Funds (equivalent to ZAR248.50 million);
and
* AUSD3.5 million from Management (equivalent to ZAR 24.50 million).
The entire consideration will be applied as follows:
1. Purchase of shares in SG Fleet from Dufour AUSD21.95 million
(equivalent to ZAR153.65 million);
2. Cash retained in Bluefin Investments Limited ("Bluefin", a Super
Group subsidiary registered in Mauritius) as a reserve for future
investment in SG Fleet AUSD15.0 million (equivalent to ZAR105.00
million); and
3. Cash retained in Super Group AUSD2.05 million (equivalent to
ZAR14.35 million).
4. Rationale for the Transaction
Super Group believes that CHAMP Ventures brings to SG Fleet the appropriate
financial stature and capability in the Australian market and that it is an
ideal partner for Super Group in the growth and development of SG Fleet.
We believe SG Fleet has significant opportunities for continued growth and
development in Australia, New Zealand and the United Kingdom. Super Group has
decided to introduce CHAMP Ventures to SG Fleet as a strong Australian partner,
in order to maximise these growth opportunities.
CHAMP Ventures brings substantial expertise working with growth companies such
as SG Fleet in the Australian market and has the capacity to either provide or
procure further funding to support SG Fleet`s growth strategy. For further
information concerning CHAMP Ventures please refer to www.champventures.com.
At the same time, Management will invest alongside CHAMP Ventures. Super Group
believes that this will provide Management with a strong incentive to
successfully execute SG Fleet`s growth strategy and also secure their long term
services to SG Fleet.
As noted in section 5 below, the Transaction results in a 4.3% reduction in pro
forma earnings per share. Super Group believes that the enhanced growth
prospects for SG Fleet under the new ownership structure outweighs the short
term dilution in pro forma earnings per share.
5. Pro forma financial effects
The unaudited pro forma financial effects of the Transaction set out below have
been prepared to assist Super Group shareholders in assessing the impact of the
Transaction on Super Group`s historical earnings per share ("EPS") and headline
earnings per share ("HEPS"). The pro forma financial effects are the
responsibility of the directors of Super Group and are provided for illustrative
purposes only.
The pro forma financial effects have been prepared on the basis that the
Transaction had been fully implemented on 1 July 2010 for Income Statement
purposes and as at 31 December 2010 for purposes of the Statement of Financial
Position. It does not purport to be indicative of what the consolidated
financial results would have been had the Transaction been implemented on a
different date. The material assumptions are set out in the notes following the
table.
Due to their nature, the pro forma financial effects may not fairly present the
financial position, changes of equity, results of operations or cash flows of
Super Group after implementation of the Transaction.
The value of and the profits attributable to the net assets of SG Fleet are
R567.8 million and R39.7 million, respectively.
The pro-forma financial effects of the transaction on Super Group`s consolidated
results for the six months ended 31 December 2010, calculated in terms of the
provisions of the JSE Listings Requirements, is as follows:
Before the After the % change
Transaction(1) Transaction
EPS (cents) 4.7 4.5 (4.3%)
HEPS (cents) 4.7 4.5 (4.3%)
Weighted average number of 3,205,284 3,205,284 -
shares in issue* (`000)
*excludes treasury shares
Notes:
1. Extracted from Super Group`s published unaudited interim results
for the six months ended 31 December 2010.
2. The effects on the EPS and HEPS are based on the following
principal assumptions:
- Interest earned on net proceeds is based on an interest rate of 5.5%.
- The spot rate at 31 December 2010 is R6.91=AUSD1.00 and the average
rate for the 6 month period ended 31 December 2010 is R6.73=AUSD1.0.
- The tax rate is assumed at 28% for South African companies.
3. The impact of the Transaction on Super Group`s net asset value and
net tangible asset value at 31 December 2010 is not material.
4. The pro forma financial effects have been prepared using the same
accounting policies as those applied in the most recently published
annual financial statement of Super Group.
6. Conditions precedent
The Transaction remains subject to the following conditions precedent:
1. No event, matter or circumstance occurring between 30 June 2010
and closing which has or is reasonably likely to result in the:
(a) EBITDA of SG Fleet for the period to 30 June 2011 being reduced by
more than 20% as compared to the 2011 budget; or
(b) the net asset value of SG Fleet being reduced by more than AUSD10
million from the amount set out in the 2011 budget as at 30 June
2011;
2. The Foreign Investment Review Board of Australia approving the
transfer of all the shares in and loans to SG Properties Pty
Limited out of the SGFH Group to Bluefin. This is a regulatory
approval in the ordinary course of business and Super Group
expects this approval to be granted.
The effective date of the Transaction will be the date of closing.
6. JSE categorisation
The disposal of 8.54% of SG Fleet to Management is classified as a small related
party transaction, as contemplated in paragraph 10.7 of the JSE Listings
Requirements.
7. Fairness opinion
Deloitte & Touche has been appointed to act as the independent expert to Super
Group, pursuant to paragraph 10.7(b) of the JSE Listings Requirements. The JSE
has been provided with written confirmation from Deloitte & Touche that the
terms of the Transaction are fair as far as the shareholders of Super Group are
concerned. The fairness opinion of Deloitte & Touche will lie for inspection at
Super Group`s registered office for a period of 28 days from the date of this
announcement.
12 April 2011
Sponsor
Deutsche Securities (SA) (Pty) Limited
Independent Expert
Deloitte & Touche Corporate Finance
Date: 12/04/2011 07:05:32 Supplied by www.sharenet.co.za
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