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BEG - Beige Holdings Limited - Restructure of property interests and acquisition
of Property
Beige Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration No: 1997/006871/06)
Share code: BEG ISIN code: ZAE000034161
("Beige" or "the company")
RESTRUCTURE OF PROPERTY INTERESTS AND ACQUISITION OF PROPERTY
Introduction
Shareholders are advised that following an offer of first right of refusal to
Beige to acquire the property occupied by its Durban based Quality Products`
operations at 174 Chamberlain Road, Jacobs, Durban, ("the Durban property"),
Beige decided to acquire the Durban property, and at the same time restructure
its existing property portfolio.
Accordingly, Beige has entered into a joint venture agreement with True Group
Property Holdings (Proprietary) Limited, the joint venture partner, which joint
venture will acquire Beige`s existing property at Chloorkop, Extension 1,
Kempton Park, ("the Chloorkop property") and the Durban property. Beige will
hold a 50% interest in and have joint control of the joint venture
The Durban property will be acquired by the joint venture from Metboard
Properties Limited for an acquisition price of R33 250 000. The Chloorkop
property will be sold by Beige to the joint venture for a purchase consideration
of R42 750 000. The existing Chloorkop property debt will be repaid and new
property funding has been secured by the joint venture.
Rationale
Beige has decided on a property strategy whereby Beige will endeavour to own its
factory premises via the joint venture, as opposed to leasing those properties
where large investments in infrastructure, plant and equipment have been, and
will continue to be, made. This is expected to maximise the utilisation of the
company`s existing assets, avoid losses, disruption and costs associated with a
large scale factory move and ensure sustainable production for its customers.
In addition, the restructure and refinancing will result in a release of
approximately R9.5 million in cash to the Beige Group, which cash will be used
for working capital and expansion purposes.
Pro Forma Financial Effects
The table below summarises the pro forma financial effects of the acquisition of
the Durban property and restructure of the Chloorkop property, as well as the
associated refinancing, on the published unaudited results of Beige for the
unaudited interim period ended 30 September 2010, as though the acquisition and
restructure had been in effect from 01 April 2010 for income statement purposes
and at 30 September 2010 for balance sheet purposes.
The pro forma financial effects, which are the responsibility of the directors,
have been prepared for illustrative purposes only and, due to their nature, may
not fairly present Beige`s financial position, changes in equity, results of
operations or cash flows.
Before the After the Change
acquisition and acquisition and (%)
restructure restructure
Earnings per share (cents) 0.52 0.38 (27.2%)
Headline earnings per share 0.52 0.53 1.6%
(cents)
Net asset value per share 13.53 13.54 0.1%
(cents)
Net tangible asset value 7.73 7.74 0.2%
per share (cents)
Ordinary number of shares 1,631,526 1,631,526 0.0%
in issue at period end
(`000)
Weighted average number of 1,539,809 1,539,809 0.0%
ordinary shares in issue
(`000)
Assumptions:
1 The "Before" column is extracted from the published unaudited results of
Beige for the six months ended 30 September 2010.
2 For purposes of the net asset value and net tangible asset value per share
calculations, the "After" column reflects the effective disposal of a 50%
interest in the Chloorkop property for R21 375 000, the acquisition of 50%
of the Durban property for R16 625 000, the repayment of original debt on
the Chloorkop property of R22 600 000 and an effective 50% share of the new
debt in the joint venture of R34 200 00 as though the transactions occurred
on 30 September 2010.
3 For purposes of the earnings and headline earnings per share calculations,
the "After" column reflects the following:
- one twentieth of the profit on the sale of the Chloorkop property of R9 100
000 for the six month period. In terms of International Financial
Reporting Standards, the R9 100 000 profit on disposal is required to be
deferred and released over the term of the new lease, being ten years,
entered into between the joint venture and a Beige subsidiary, which
accounting treatment will have a continuing effect. Therefore for purposes
of these pro-forma financial effects, the profit on sale is reflected on
this basis.
- a capital gains tax of R2 800 000 is assumed, based on the profit on sale
of the Chloorkop property of R19 800 000 at the property holding entity
level. At a Beige group level the profit on sale is R9 100 000 due to the
original property being revalued by R10 700 000. The capital gains tax is
a once-off and will not have a continuing effect.
- the reversal of 100% of the interest charges incurred in relation to the
Chloorkop property;
- the incurring of 50% of finance charges assumed on new borrowings in the
joint venture;
- the reversal of lease costs in relation to the Durban property;
- the incurring of net 50% property lease costs on the Chloorkop and Durban
properties
- taxation assumed at 28% notional tax,
as though the transactions occurred with effect from 1 April 2010.
The restructure and acquisition is expected to be effective from approximately 1
July 2011, once the transfers of the properties are effected through the deeds
office. There are no conditions precedent and the transactions are not with
related parties to the group.
By order of the Board
21 April 2011
Johannesburg
Designated Advisor
Arcay Moela Sponsors (Proprietary) Limited
Date: 21/04/2011 16:30:01 Supplied by www.sharenet.co.za
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