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QHL - Queensgate Hotels And Leisure Limited - Detailed cautionary announcement
- restructuring of queensgate, details of potential acquisition and renewal of
cautionary
QUEENSGATE HOTELS AND LEISURE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/013649/06)
Share code: QHL ISIN Code: ZAE000113718
("Queensgate" or "the Company")
DETAILED CAUTIONARY ANNOUNCEMENT - RESTRUCTURING OF QUEENSGATE, DETAILS OF
POTENTIAL ACQUISITION AND RENEWAL OF CAUTIONARY
INTRODUCTION
Following the cautionary announcements dated 19 December 2011 and 2 February
2012, the Board of Directors of the Company is pleased to advise shareholders
that it intends implementing a revised business strategy and commercial focus
that is expected to deliver sustainable cash flow and value enhancement to
shareholders.
BUSINESS OVERVIEW
The Board is certain that the current business model of Queensgate is
incapable of delivering sustainable cash flows to shareholders in the midst of
a highly competitive environment, global economic instability, and significant
reduction in tourism.
Research has been was conducted into business opportunities and potential
revenue sources which could be deemed defensible and sustainable.
As a result of the findings of the research, the Board has committed to
converting Queensgate into an investment holding company in the broadest
sense, with a particular focus on the acquisition of petroleum and related
property assets in the short to medium term, and the acquisition of water
assets and resources in the long term. The desired nature of transactions in
the petroleum sector include diesel depots, storage facilities, logistics,
filling stations, and where appropriate or viable, the development of such
facilities. The future focus on water resources will be limited to logistics
and storage.
CHANGE IN NAME
The Board has agreed to consider a change in the trading name of the Company,
in line with the redefined and stated objectives of the Company. Brand
strategists have recommended retaining the primary name, and it is proposed
that the name of the Company be changed to Queensgate Investment Holdings
Limited, subject to approval by the Companies and Intellectual Properties
Commission (CIPC). The proposed change in name will require shareholder
approval in due course.
COMPLIANCE
The Board of Directors is presently attending to all compliance matters
relating to the affairs of the Company in preparation for the acquisition of
certain assets detailed below. Considerable progress has been made in this
regard.
CREDITORS
All creditors of the Company have received written notification of intentions
to reach settlement agreements with the Company. A number of agreements have
been reached and significant progress has been made in negotiations with
remaining creditors.
MANAGEMENT
As has previously been announced, the Board of Directors of the Company was
restructured in accordance with an asset management agreement reached between
the Company and Continuiti Real Estate Asset Management (Proprietary) Limited
("Continuiti"), in terms of which Kenneth Dreyer Morison ("Morison") and Daryl
Charles Ducasse ("Ducasse") were appointed to the board with a view to them
assisting the board through the restructuring process.
RELATED PARTIES - KEY OPERATIONAL AGREEMENT
On 13 October 2011, the Company entered into an asset management agreement
with Continuiti, a company controlled by Morison and Ducasse, with the aim of
Continuiti delivering and managing opportunities for the benefit of the
Company and its shareholders on a reciprocity basis. To this extent, Morison
and Ducasse have agreed to devote a considerable amount of their time, energy
and resources towards achieving the strategic objectives of the Company, and
the Company has agreed to remunerate them on a performance-related risk basis
in terms of the asset management agreement. This has the beneficial effect of
not taxing the limited financial resources of the Company in the early stages
of the turnaround strategy.
The asset management agreement is subject to certain conditions and may
require shareholder approval in due course in accordance with JSE Listings
Requirements.
TRANSACTION PIPELINE:
On 22 November 2011, Continuiti entered into a Heads of Agreement with
Ellisras Brandstof en Olie Verspreiders (Proprietary) Limited ("EBOV"), to
acquire the shares and loan account claims (the "Sale Assets") from Casper
Nortje (50%), Frans Faber (25%) and Riana Faber (25%) ("the EBOV
shareholders") for an amount of R33,000,000.00 (Thirty Three Million Rands).
EBOV owns a wholesale license, and land and buildings from which it operates a
diesel depot in Lephalale (formerly Ellisras), Limpopo.
On 15 February 2012, Continuiti nominated the Company as its nominee in the
transaction, which nomination the Company accepted. Accordingly, shareholders
are advised that it is the intention of the Company to acquire the Sale Assets
of EBOV as a going concern.
The transaction is subject to various conditions precedent, including amongst
others, the conclusion of a comprehensive transaction agreement and
shareholder approval.
A final terms announcement, including pro forma financial effects will be
published in a separate SENS announcement once a comprehensive transaction
agreement has been signed.
FURTHER TRANSACTIONS AND NEGOTIATIONS:
The Company has entered into negotiations to acquire a number of other assets
in similar or related activities, including a proposed joint venture with an
entity holding a petroleum import license.
Shareholders are cautioned that the implementation of any proposed
acquisition, which will result in the issue of more than 100% of the current
issued share capital of the Company, will accordingly result in a reverse
takeover of Queensgate for the purposes of the Listings Requirements, which
stipulate that the Company can only retain its listing following the reverse
take-over if the JSE is satisfied that the Company continues to qualify to be
listed.
The assets must be suitable for a new listing and approved by the JSE Limited
`JSE`). A working capital statement will be made as part of the JSE Listings
Requirements.
RENEWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are advised to continue to exercise caution when dealing in their
securities until a further announcement has been made.
By order of the board
16 February 2012
Designated Advisor
Arcay Moela Sponsors
Date: 16/02/2012 08:26:40 Supplied by www.sharenet.co.za
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