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CRG - Cargo Carriers - Announcement regarding the Acquisition of A 55% (Fifty

Release Date: 07/06/2012 15:36
Code(s): CRG
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CRG - Cargo Carriers - Announcement regarding the Acquisition of A 55% (Fifty Five Per Cent) Interest in Buks Haulage Limited ("BHL") and Withdrawal of Cautionary Announcement CARGO CARRIERS LIMITED (Registration Number 1959/003254/06) Share code: CRG ISIN: ZAE000001764 ("Cargo Carriers" or "the Company") ANNOUNCEMENT REGARDING THE ACQUISITION OF A 55% (FIFTY FIVE PER CENT) INTEREST IN BUKS HAULAGE LIMITED ("BHL") AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT 1 Introduction Further to the cautionary announcement released on SENS on 8 May 2012, the directors of Cargo Carriers are pleased to announce the conclusion of an agreement by the Company on 5 June 2012, in terms of which the Company will acquire 55% (fifty five per cent) of the issued share capital of BHL ("the Acquisition") with effect from the date of fulfilment or waiver of the suspensive conditions set out in paragraph 5 below. The initial purchase consideration is USD 2 200 000 (two million two hundred thousand US dollars) to be settled by an upfront payment of USD 1 496 000 (one million four hundred and ninety six thousand US dollars) and two annual payments of USD 352 000 (three hundred and fifty two thousand US dollars) based on warranted profits after tax for the next three financial years of USD 1 000 000 (one million US dollars) per year. The final purchase consideration will be determined based on a prescribed formula calculated on BHL`s profits after tax over the next three years and may be adjusted up or down, provided that the total amount payable shall not exceed USD 4 400 000 (four million four hundred thousand US dollars). Any adjustment to the final purchase consideration, whether through additional payments by or refunds to the Company, will be settled over a five year period. The vendor is not a related party to Cargo Carriers. 2. Nature of Business of BHL BHL is a Zambian registered company specialising in the transport of various commodities including, inter alia, copper concentrates, lime and sulphuric acid. The company provides total logistics solutions within Zambia and sub-Saharan Africa to clients operating within the mining, manufacturing and agricultural sectors, with the majority of its business being in Zambia, DRC and Namibia. 3. Rationale for the Acquisition Cargo Carriers` stated growth objective has included growth by acquisition and risk diversification through business in neighbouring countries. The acquisition of a controlling interest in BHL achieves both of these. This transaction expands Cargo Carriers` ability to provide logistics solutions in the sub-continent and to take advantage of the burgeoning mining economy in Zambia. There are significant growth prospects in both the mining and industrial sectors and by acquiring a well-established business with long term contracts and proven management, the growth of Cargo Carriers on a low risk basis is enabled. 4. Suspensive Conditions The Acquisition is subject to the following regulatory approvals and suspensive conditions: - to the extent required, the approval of the Financial Surveillance/Exchange Control Department of the South African Reserve Bank, either unconditionally or subject to such conditions which each party affected thereby confirms to the other in writing is/are acceptable; - to the extent required, the approval of the relevant Zambian authority under the Competition and Consumer Protection Act, either unconditionally or subject to such conditions which each party affected thereby confirms to the other in writing is/are acceptable to it; and - the conclusion of a shareholders agreement between Cargo Carriers and the Vendor. 5. Financial Effects of the Acquisition The table below sets out the unaudited pro forma financial effects of the Acquisition on Cargo Carriers based on the published audited results for the year ended 29 February 2012. The unaudited pro forma financial information has been prepared in order to show the effects of the Acquisition, assuming that the Acquisition took place on 1 March 2011 for purposes of the statement of comprehensive income, and as at 29 February 2012 for purpose of the statement of financial position. 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 Cargo Carriers financial position, changes in equity, cash flow or the results of its operations. 29 February 31 March 2012 2012
Before After % Acquisition Acquisition change Weighted Average 19 400 19 400 0.0% shares in issue Earnings per 2.5% ordinary share 64.95 66.57 (cents) Headline earnings 10.1% per ordinary share 60.71 66.84 (cents) Shares in issue at 19 400 19 400 0.0% period end (`000) Net asset value 0.0% per share (cents) 17.71 17.71 Net tangible asset -0.1% value per share 17.57 17.55 (cents) Assumptions: (i) The "Before" column is based on Cargo Carriers published audited results for the year ended 29 February 2012. (ii) In order to provide as current information as possible to Cargo Carriers shareholders, BHL`s management accounts for the year ended 31 March 2012 were utilised for consolidation purposes. The directors of Cargo Carriers confirm that they are satisfied with the quality of these accounts. (iii)The pro forma financial effects have been calculated based on a purchase consideration of USD 2 200 000 on the assumption that BHL has achieved the stated profit warranties of USD 1 000 000 per annum for the three year period commencing 1 April 2012. (iv) The exchange rate applicable at 31 March 2012 of R7.6479 was used to translate the statement of financial position and the average rate during the period was applied to the statement of comprehensive income. (v) The assets and liabilities of BHL were fair valued at 31 March 2012. (vi) The calculation of goodwill was based on the adjusted fair value of the assets and amounted to R463 608. (vii)The depreciation charge was adjusted for the increased fair value of assets and the alignment of BHL`s existing policy with that of the Group. (viii)The adjustments in paragraphs (i) and (v) will have a continuing effect on the Company. 6. Categorisation of the Acquisition in Terms of the JSE Listings Requirements and Conformity of Memorandum of Incorporation The acquisition is classified as a category 2 transaction in terms of the JSE Listings Requirements. The JSE does not require the approval of shareholders for a category 2 transaction. On fulfilment of the conditions precedent, the Company will ensure that BHL`s memorandum of incorporation is amended to the extent required in order to ensure conformity with Schedule 10 of the JSE Listings Requirements. 7. Further Announcement Cargo Carriers shareholders will be advised by way of a SENS announcement when the suspensive conditions have all been fulfilled or waived and the Acquisition becomes unconditional. 8. Withdrawal of Cautionary Announcement Following the release of this announcement, the cautionary announcement is withdrawn and shareholders are no longer required to exercise caution when dealing in the securities of the Company. Johannesburg 7 June 2012 Sponsors Arcay Moela Sponsors (Pty) Ltd Date: 07/06/2012 15:36:02 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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