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UBU - Ububele - Acquisition by Yield Chemicals Group (PTY) Limited of 49.9% of the issued share capital of Erintrade (PTY) Limited and R.T. Chemicals (PTY) Limited Ububele Holdings Limited Incorporated in the Republic of South Africa (Registration number: 1998/011074/06) Share code: UBU ISIN Code: ZAE000144739 ("Ububele" or "the Company") ACQUISITION BY YIELD CHEMICALS GROUP (PTY) LIMITED OF 49.9% OF THE ISSUED SHARE CAPITAL OF ERINTRADE (PTY) LIMITED ("ERINTRADE") AND R.T. CHEMICALS (PTY) LIMITED ("R.T. Chemicals") 1. THE ACQUISITION 1.1 Shareholders are hereby advised that Yield Chemicals Group (Pty) Limited ("the Purchaser" or "Yield Chemicals Group"), a subsidiary of the Company, has entered into a sale of shares agreement with Messrs Richard Peter Wimbush, Richard Trevor Wimbush and JJ Faul (collectively hereinafter "the Sellers"), in terms of which the Sellers will dispose of 49.9% of the entire issued share capital in Erintrade (Pty) Limited and R.T. Chemicals (Pty) Limited ("the Sale Shares"), to the Purchaser ("the Acquisition"). 1.2 The Company currently has an existing interest of 50.1% in Erintrade and R.T Chemicals and the Sellers are all directors of Erintrade and R.T Chemicals. 1.3 As mentioned in paragraph 1.1 above, the Sellers collectively consist of the following individuals, who hold the following proportionate interests in the issued share capital of Erintrade and R.T Chemicals: 1.3.1 Richard Peter Wimbush - 16.9%; 1.3.2 Richard Trevor Wimbush - 26.3%; and 1.3.3 JJ Faul - 6.7%. 2. BUSINESS CARRIED ON BY ERINTRADE AND R.T CHEMICALS Erintrade and R.T Chemicals were formed respectively in 2006 and 1987 and have morphed from start-up businesses supplying detergents, adhesives, fire fighting foams and speciality paints into specialist businesses now concentrating solely on the manufacturing and distribution of a core range of crop enhancement products. Currently the companies own 63 registrations, with another 51 registrations on various cultivars, in different stages of registration. Erintrade and R.T Chemicals currently distribute products in South Africa, Namibia, Botswana, Zimbabwe, Mozambique, Tanzania and Malawi. 3. EFFECTIVE DATE OF THE ACQUISITION In terms of the sale of shares agreement the effective date of the Acquisition is 1 July 2011. 4. RATIONALE OF THE ACQUISITION The Yield Chemicals Group is currently involved in the distribution of crop enhancement products in South Africa and other African countries. Yield Chemicals Group already owns 50.1% of Erintrade and RT Chemicals, and Enviro Industries, and the purchase of the remainder of the equity in Erintrade and RT Chemicals will give the Yield Chemicals Group full control over its own manufacturing operations and will enhance the Yield Chemicals Group. 5. PURCHASE CONSIDERATION 5.1. The total consideration payable by the Purchaser to the Sellers for the purchase of the Sale Shares is the sum of R40 000 000 and shall be payable in cash to the Sellers in the following proportions: 5.1.1 Richard Peter Wimbush - R13 547 094.19; 5.1.2 Richard Trevor Wimbush - R21 082 164.33; and 5.1.3 JJ Faul - R5 370 741.48. 5.2 The purchase consideration will be settled by the Purchaser by no later than 1 October 2011. The parties have also agreed that the Sellers may grant the Purchaser a maximum of 60 days grace to settle the purchase consideration. 5.3 The Purchaser shall pay interest monthly in arrears on the purchase consideration, or any portion thereof outstanding after the effective date at a rate of prime plus 2% until the full purchase consideration and interest are paid in full. 6. CONDITIONS PRECEDENT The Acquisition is subject to the following condition precedent that has not been fulfilled: 6.1 By no later than 30 September 2011 the Purchaser shall furnish the Sellers with a bank guarantee for the payment of an amount of not less than R40 million from a recognised major bank, on terms and conditions and in a form reasonable to the Sellers. 7. WARRANTIES Warranties as are normal in transactions of this nature have been provided by each of the Sellers, to the Purchaser. 8. PRO FORMA FINANCIAL EFFECTS The pro forma financial effects of the Acquisition are presented for illustrative purposes only and because of their nature may not give a fair reflection of the Company`s financial position nor of the effect on future earnings after the Acquisition. Set out below are the unaudited pro forma financial effects of the Acquisition, based on the reviewed abridged results for the year ended 30 June 2011. The directors of Ububele are responsible for the preparation of the unaudited pro forma financial information. Reviewed Pro Unaudited Pro Change (%)
Forma before Forma after acquisition acquisition (cents) (cents) Basic earnings per 1.25 1.71 36.45 share Basic headline 1.27 1.73 35.91 earnings per share Net asset value per 73.81 73.47 (0.46) share Net tangible asset 7.13 (4.23) (159.37) value per share Notes and assumptions: 1 The "Reviewed Pro Forma before acquisition" figures have been extracted from the Reviewed Provisional financial statements of Ububele for the year ended 30 June 2011. 2 The basic earnings per share and basic headline earnings per share figures in the "Pro Forma after acquisition" column have been calculated on the basis that the Acquisition was effected on 1 July 2010. 3 The net asset value per share and net tangible asset value per share figures in the "Pro forma after acquisition" column have been calculated on the basis that the Acquisition was effected on 30 June 2011. 4 The taxation rate applicable is assumed to be 28%. 5 The basic earnings per share and basic headline earnings per share figures are calculated based on weighted average number of shares in issue of 177 161 405 at 30 June 2011. 6 The net asset value per share and net tangible asset value per share have been calculated based on 177 167 822 shares in issue at 30 June 2011. 7 Interest paid is based on the prime lending interest rate. 8 Transaction costs of R600 000 have been assumed. 9. RELATED PARTY AND CATEGORISATION OF THE TRANSACTION The Acquisition is classified as a Category 1 transaction in terms of the Listings Requirements of the JSE Limited requiring shareholder approval. Ububele shareholders are further advised that due to the fact that the Sellers are directors of R.T Chemicals, which is a subsidiary of the Company, the Acquisition is also deemed to be a related party transaction in terms of the Listings Requirements of the JSE Limited and therefore the board will appoint an independent expert to prepare a fairness opinion on the Acquisition. 10. DOCUMENTATION Accordingly, a circular detailing the terms of the Acquisition, containing the fairness opinion and convening a general meeting will be posted to Ububele shareholders in due course. 16 September 2011 Designated Adviser PSG Capital (Pty) Limited Date: 16/09/2011 13:43:51 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
