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AET - Alert Steel Holdings Limited - Pro-forma restructured statement

Release Date: 31/10/2011 12:53
Code(s): AET
Wrap Text

AET - Alert Steel Holdings Limited - Pro-forma restructured statement of financial position ALERT STEEL HOLDINGS LIMITED (Incorporated in the Republic of South Africa) (Registration number 2003/005144/06) JSE code: AET ISIN: ZAE000092847 ("Alert Steel" or "the company" or "the group") Pro-forma restructured statement of financial position 1. Introduction and purpose Due to the material nature of the post balance sheet events that have taken place subsequent to the 30 June 2011 year end, the board of Alert Steel would like to update investors on what the effect of these events would have been on the statement of financial position, had the transactions taken place on 30 June 2011. Shareholders are referred to the provisional financial results of Alert Steel as announced on SENS on 17 October 2011 where these pro-forma financial results were disclosed. 2. Summary of post balance sheet events A summary of the individual post balance sheet events has been provided in paragraphs 2.1 to 2.4 below. 2.1 Rights offer Shareholders are referred to an announcement released on SENS on 12 October 2011 in which the results of the rights offer were communicated to investors. In terms of the rights offer, a total of 1 515 151 515 new ordinary shares were issued at a price of 3.3 cents per rights offer share, resulting in a total cash inflow to Alert Steel of R50 000 000. 2.2 Restructuring of loan Following the completion of the rights offer, Nedbank Limited ("Nedbank") agreed to restructure the overdraft owing by Alert Steel amounting to R90 000 000. In terms of the restructuring, the overdraft was converted into long term loan owing to Nedbank, the terms of which are as follows: - R70 000 000 bears interest at prime minus 2 percent and is repayable on the fifth anniversary of the advance date; and
- R20 000 000 bears interest at prime and is repayable in 24 equal monthly installments, starting in month 13. The loan was secured by a cession of debtors and general notarial bonds of R162 000 000. 2.3 Murray & Roberts transaction The group has entered into a transaction with Murray & Roberts Steel (Pty) Ltd, in terms of which the group disposed of RSC Polokwane division and its shares in Alert Reinforcing (Pty) Ltd while acquiring the balance of the shares in Alert Steel Polokwane (Pty) Ltd (the "indivisible transactions"). Shareholders are referred to the circular posted to shareholders on 29 August 2011 wherein, the full details of the indivisible transactions were disclosed to shareholders and the SENS announcement on 29 September 2011, informing shareholders of the approval of, inter alia, the resolutions relating to the indivisible transactions in general meeting. 2.4 Alert Steel North West transaction The group acquired 100% of the shares in and claims against Alert Steel North West (Pty) Ltd ("Alert Steel North West"), effective 1 February 2011. Per the sale agreement and as disclosed in the circular posted to shareholders on 29 August 2011, the purchase consideration for the shares so acquired was determined in accordance with an agreed formula which is dependent on the net asset value of Alert Steel North West at a date determined by Alert Steel which is more than twenty four months but less than thirty six months after the closing date of this transaction ("the Conversion Date"). The purchase consideration for the claims so acquired is the face value of all claims against Alert Steel North West so acquired. The portion of the purchase consideration relating to acquired claims was discharged by the creation of a loan claim by Alert Steel in favour of the seller, Capital Africa Steel (Pty) Ltd ("CAS"). The loan so created bears interest at prime plus 2%. Both the loan claim so created and the purchase consideration for the shares acquired will be discharged by conversion into ordinary shares in Alert Steel on the Conversion Date referred to above. Shareholders are referred to the circular posted to shareholders on 29 August 2011, wherein the full details of the Alert Steel North West transaction were disclosed to shareholders and the SENS announcement on 29 September 2011, informing shareholders of the approval of the resolutions relating to, inter alia, this transaction in general meeting. 3. Pro-forma financial effects The pro-forma financial effects are presented for illustrative purposes only and, because of their nature, may not fairly present Alert Steel`s financial position after the transactions have been implemented. The pro-forma financial effects are the responsibility of the directors of Alert Steel. The effect on the statement of financial position, had the transactions taken place on 30 June 2011, is as follows: PRO-FORMA RESTRUCTURED STATEMENT OF FINANCIAL POSITION Loan
Before Rights restruc- R`000 offer ture Assets Non-current assets 139 485 - - Current assets 238 803 - - Assets held for sale 20 187 - - Total assets 398 475 - - Equity and liabilities Equity (28 132) 50 000 - Non-current liabilities 72 452 - 90 000 Current liabilities 340 867 (50 000) (90 000) Liabilities held for sale 13 288 - - Total liabilities 426 607 (50 000) - Total equity and liabilities 398 475 - - PRO-FORMA RESTRUCTURED STATEMENT OF FINANCIAL POSITION continued Murray & North Roberts West Re- trans acqui- struct- R`000 action sition ured Assets Non-current Assets 979 6 747 147 211 Current Assets 30 095 25 556 294 454 Assets held for sale (20 187) - - Total Assets 10 887 32 303 441 665 Equity and liabilities Equity - - 21 868 Non-current liabilities - 21 709 184 161 Current liabilities 24 175 10 594 235 636 Liabilities held for sale (13 288) - - Total liabilities 10 887 32 303 419 797 Total equity and liabilities 10 887 32 303 441 665 3.1 Basis of preparation This pro-forma statement of financial position has been prepared in terms of International Financial Reporting Standards ("IFRS") and the Revised Guide on Pro-Forma Financial Information issued by the South African Institute of Chartered Accountants. 3.2 Notes and assumptions - The financial information as set out in the "Before" column has been extracted without adjustment from the reviewed published provisional results of Alert Steel for the financial year ended 30 June 2011. - The column headed "Rights Offer" has been calculated as the actual number of shares taken up in terms of the Alert Steel rights offer of 1 515 151 515 shares issued at a rights offer price of 3.3 cents per rights offer share thereby generating a cash inflow of R50 000 000. - The column headed "Loan Restructure" refers to the restructuring of the Nedbank loan subsequent to the completion of the rights offer and on the terms disclosed in paragraph 2.2. The proceeds on the Nedbank loan were applied by Alert Steel to settle the bank overdraft. - The column headed "Murray & Roberts" transaction has been extracted from the reviewed published pro-forma financial results of the indivisible transactions as published in the circular posted to shareholders on 29 August 2011, and adjusted for the net change in the net asset value of the divisions forming the indivisible transactions. The Reporting Accountant of Alert Steel has reviewed this calculation. - The column headed "Alert North West acquisition" has been extracted from the reviewed published pro-forma financial results as published in the circular posted to shareholders on 29 August 2011, and adjusted for the net change in the net asset value of Alert Steel North West in terms of the formula as disclosed in the above mentioned circular. The Reporting Accountant of Alert Steel has reviewed this calculation. - The pro-forma adjustments as disclosed above are expected to have a continuing effect on the company. 4. Reporting accountants` limited assurance report on the pro-forma consolidated financial effects The reporting accountants of Alert Steel have performed a limited assurance engagement in respect of the pro-forma restructured statement of financial position. The limited assurance report states that, based on the reporting accountants` examination of the evidence obtained, nothing has come to their attention that causes them to believe that: - the pro-forma restructured financial position has not been properly compiled on the basis stated; - such basis is inconsistent with the accounting policies of Alert Steel; and - the adjustments are not appropriate for the purposes of the pro-forma financial information as disclosed pursuant to sections 8.17 and 8.30 of the JSE Listings Requirements. The Reporting Accountants have consented to the references made to their opinion letter in this announcement and have not withdrawn this consent subsequent to the date of publishing of this announcement. A copy of the Reporting Accountants` limited assurance report is available for inspection at the company`s registered office, cnr Engelbrecht and Lanham Streets, East Lynne, Pretoria. By order of the Board For and on behalf of the board M McCulloch J du Toit Chairman Chief executive 31 October 2011 Pretoria Designated Advisor QuestCo Sponsors (Pty) Ltd Date: 31/10/2011 12:53:01 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.

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