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QHL - Queensgate Hotels And Leisure - Detailed cautionary announcement and
update
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 - UPDATE ON PROPOSED ACQUISITION, PROPOSED
CAPITAL RAISING INITIATIVE, DISCLOSURE OF AGREEMENTS IN RESPECT OF PROPOSED
ACQUISITIONS AND RENEWAL OF CAUTIONARY
Shareholders are referred to the previously published cautionary announcements
of 16 February, 05 April and 23 May 2012 respectively, and are advised of the
following progress updates in respect of the restructuring of the Company in
line with its stated revised objectives:
1. PROGRESS UPDATE ON THE PROPOSED ACQUISITION OF ELLISRAS BRANDSTOF EN OLIE
VERSPREIDERS (PROPRIETARY) LIMITED (THE "EBOV" TRANSACTION):
The comprehensive transaction agreement between the Company and the
shareholders of Ellisras Brandstof en Olie Verspreiders (Pty) Limited
("EBOV") regarding the acquisition of 100% of the shares and claims in
EBOV, for a purchase consideration of R33 000 000.00 (thirty three
million Rand) has not yet been finalised.
In order to support the acquisition price, management are negotiating a
two year net profit warranty of R7,500,000.00 per annum for the two year
period following the Effective Date of the transaction, as well as the
terms of a two year management agreement in terms of which the key
operational parties will maintain ongoing operational responsibility for
the two year period consistent with the aforesaid warranty. Shareholders
will be advised of developments in this regard in due course.
2. AGREEMENTS IN RESPECT OF PROPOSED ACQUISITIONS
The board of Queensgate are pleased to announce that negotiations for the
acquisition of a further five transactions consisting of wholesale diesel
depots, and a diesel storage facility, with an aggregate transaction
value of R204,000,000.00 (two hundred and four million Rand) are
proceeding. Non-Disclosure and Non-Circumvention agreements have been
entered into in respect of these transactions.
All the businesses aforementioned, inclusive of EBOV, have historically
delivered profit before tax of approximately R44,235,804.00 to the vendor
shareholders. However, it is uncertain how many of the acquisitions will
be successfully concluded.
The board further advises that it has entered into negotiations with an
international investment company to acquire the shares and loan accounts
of a Botswana manufacturing operation. A reciprocal Non-Disclosure and
Non-Circumvention Agreement has been signed in this regard, and further,
detailed information will be released following signature of a Heads of
Agreement.
Further announcements will be made regarding pricing, terms, conditions
and financial effects arising from the agreements to be signed.
3. TANGIBLE NET ASSET VALUE
When concluded, the transactions will deliver land and improvements to
the Company in support of its efforts to deliver tangible net asset value
to shareholders.
Land with a total extent of 107,421,000m2 forms part of the acquisitions
under negotiation, resulting in a potential `land only` real estate value
of R2,200/m2, including the improvements, inventory, moveable`s, product
and profits, assuming all the transactions are successfully concluded.
It is with this in mind that the board are confident Queensgate has the
ability to offer a competitive investment proposition to market, where
investors are assured of security of capital, a high quality income
derived from strong sales revenues, and an ability to exit their
investment at a time and in a manner suitable to them.
On a comparable basis, the yield generated from the real estate underpin
is approximately 13%.
4. PROPOSED REVERSE LISTING
Shareholders are cautioned that implementation of the proposed
acquisition/s will 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
("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 business plan will be submitted to the Alternative
Exchange ("AltX") Advisory Committee for consideration. A working
capital statement will be made as part of the JSE Listings Requirements.
Notwithstanding the proposed reverse takeover of Queensgate by the
Botswana entity, their board has agreed that Queensgate should pursue its
adopted strategy and continue to deliver opportunities within the scope
of its` stated objectives.
5. WAIVER OF A MANDATORY OFFER
On implementation of the proposed acquisition/s, one or more of the
transactions may be considered an "affected transaction" by the Takeover
Regulation Panel ("TRP") which ordinarily would require a mandatory offer
to acquire the Queensgate shares owned by all Queensgate shareholders at
an offer price to be determined. However, at this stage it is not
possible to determine whether a mandatory offer would be required. The
company will assess the situation in due course and will consider
approaching the TRP to allow shareholders to waive the requirement for a
mandatory offer and will advise shareholders in due course of the outcome
of any approach to the TRP.
6. PROPOSED CAPITAL RAISING INITIATIVES
The board is of the view that conclusion of the transactions will
necessitate a capital raising initiative in order that funding may be
raised in an amount of up to R300,000,000.00. The proceeds will be
utilised towards the purchase considerations in each of the transactions,
transaction costs, including legal fees, working capital reserves, and
capital earmarked for pipeline transactions.
7. RENEWAL OF CAUTIONARY ANNOUNCEMENT
Accordingly, shareholders are advised to continue to exercise caution
when dealing in the Company`s securities until a further announcement is
made.
Johannesburg
20 June 2012
Designated Advisor
Arcay Moela Sponsors (Proprietary) Limited
Registration number 2006/033725/07
Date: 20/06/2012 11:00:01 Supplied by www.sharenet.co.za
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