To view the PDF file, sign up for a MySharenet subscription.

DON - The Don Group Limited - Disposal of Ikapa Tours & Travel (Proprietary)

Release Date: 13/12/2011 10:00
Code(s): DON
Wrap Text

DON - The Don Group Limited - Disposal of Ikapa Tours & Travel (Proprietary) Limited THE DON GROUP LIMITED Incorporated in the Republic of South Africa (Registration number 1946/023123/06) Share code: DON ISIN: ZAE000008462 ("The Don") DISPOSAL OF IKAPA TOURS & TRAVEL (PROPRIETARY) LIMITED 1. INTRODUCTION The board of directors of The Don ("the Board") is pleased to advise shareholders that Ikapa Tours & Travel (Proprietary) Limited ("Ikapa"), a 56.66% subsidiary of The Don has successfully concluded an agreement ("the business disposal agreement") with Cullinan Holdings Limited ("Cullinan"), for the sale to Cullinan of the entire business of Ikapa as a going concern, excluding liabilities ("the business disposal"). In a separate agreement entered into between The Don and Ikapa ("the equity disposal agreement"), The Don shall sell its entire shareholding in Ikapa to Ikapa for a total cash consideration of R1, be indemnified against all future liabilities of Ikapa and shall receive R6 000 000 from the proceeds of the sale of the business of Ikapa to Cullinan, as detailed in the business disposal agreement ("the equity disposal"). 2. THE DISPOSAL 2.1 Nature of Ikapa and rationale for the disposal The Don acquired a 51.00% shareholding in Ikapa, an inbound tour operator based in Cape Town, in 2009, and a further 5.66% in 2011. Ikapa facilitates all aspects of its clients` travel requirements, including flights, accommodation, car hire and long distance tours throughout South Africa as well as Botswana, Namibia, Zambia and to the Victoria Falls in Zimbabwe. At the time, the Board believed that The Don would obtain marketing exposure, especially from domestic and international tour groups, which would facilitate an increase in occupancy rates. However, the purpose for which Ikapa was originally acquired as stated above, is no longer consistent with The Don`s long- term strategy of diversifying away from the hotel and leisure sector, hence the disposal. 2.2 Purchase consideration In a separate agreement entered into between The Don and Ikapa, The Don shall sell its entire shareholding in Ikapa to Ikapa for a total cash consideration of R1, be indemnified against all future liabilities of Ikapa and shall receive R6 000 000 from the proceeds of the sale of the business of Ikapa to Cullinan, as detailed in the business disposal agreement. The proceeds from the sale of Ikapa will be used for working capital purposes and settlement of existing liabilites. 2.3 Effective date The effective date of the disposal is 1 November 2011. 2.4 Insolvency Act Provisions Ikapa and Cullinan have agreed in the business disposal agreement that notice of this transaction will not be published as contemplated in Section 34 of the Insolvency Act 24 of 1936, as amended. Ikapa indemnifies Cullinan against all loss, liability, damage and expense of every nature whatsoever which Cullinan may suffer as a result of this disposal not being published. 2.5 Warranties Warranties as are normal in transactions of this nature have been provided for in the business disposal agreement. 2.6 Conditions Precedent There are no outstanding conditions precedents in either the business disposal agreement or the equity disposal agreement. 3. PRO FORMA FINANCIAL EFFECTS OF THE DISPOSAL The table below sets out the unaudited pro forma financial effects of the equity disposal, on The Don`s earnings per share, headline earnings per share, net asset value per share and tangible net asset value per share. The unaudited pro forma financial effects have been prepared to illustrate the impact of the equity disposal on the reported financial information of The Don for the year ended 30 June 2011, had the equity disposal occurred on 1 July 2010 for income statement purposes and on 30 June 2011 for balance sheet purposes. The unaudited pro forma financial effects have been prepared using accounting policies that comply with International Financial Reporting Standards and that are consistent with those applied in the reviewed list of investments includes: * Pure Ocean Aquaculture: Food shortages driven by a growing population, changing lifestyles towards healthier eating and dwindling wild marine stock are among the reasons for this choice of investment. There is clearly a demand for farmed fish and the challenges in long-term supply points to aquaculture as the solution. Pure Ocean is a vertically integrated aquaculture company in the development phase of setting up various sites in Southern Africa. A land-based re-circulating plant on the east coast of South Africa is under development and a cage-based project in the Lesotho Highlands already has fish in the water. * Avalloy: Avalloy is a South African company operating in a niche market segment, which is experiencing substantial growth. The Avalloy facility has world class technology and processes producing super-alloys (high- performance alloys) for the aerospace, power generation, petroleum and automobile industries. Avalloy, which is partnered with Rolls-Royce, has developed to the stage that it has obtained its necessary accreditations and customer approvals and is now entering its next phase of development. * TOR Holdings: Tor Construction is a road construction company based in the Southern Cape, which has recently increased its order book to more than twice the contract value in the previous year and the highest ever achieved. Tor Oil Infrastructure is an oil storage and related infrastructure construction company focused on developing projects throughout Southern Africa. Julian Williams added, "Significantly, as the first principal investor, we invest our own capital into our portfolio; this strategy, together with our robust investment processes ensures that we select only the best opportunities we review for inclusion. Basileus` business philosophy is firmly focused on developmental capital projects that have the potential to become significant businesses in their own right. Our business model focuses on reducing business risk through rigorous research and hands-on operational management. We believe this active management focus on ensuring that the underlying business is successful will translate into meaningful returns". Terry Brunton, the CEO of Kwanda Capital, stated that "Our mandate is to represent the interests of those third party investors participating in various projects and businesses through investment into BK One. Our working knowledge and experience of the Basileus investment processes, people and deal pipeline is a key advantage to ensuring that, when combined with our own independent investment process, an additional level of investment decision making is created, which provides investors with a greater level of comfort and optimism". For further information please contact: Dean Richards, BK One, 082 809 9996 Julian Williams, Basileus Capital, 083 708 2642 Terry Brunton, Kwanda Capital, 082 905 2822 Johannesburg 8 December 2011 Investment bank and debt sponsor Nedbank Capital Communication advisor

Share This Story