Wrap Text
WORLEYPARSONS LIMITED TO ACQUIRE 100% OF TWP HOLDINGS (PTY) LIMITED FROM BASIL READ
Basil Read Holdings Limited
(Incorporated in the Republic of South Africa)
Registration Number 1984/007758/06
Share Code: BSR ISIN: ZAE000029781
("Basil Read" or the ”Company" or the “Group”)
WORLEYPARSONS LIMITED TO ACQUIRE 100% OF TWP HOLDINGS (PTY) LIMITED FROM
BASIL READ
Highlights:
– WorleyParsons Limited to acquire Basil Read’s engineering, procurement
and contract management (EPCM) business for a total cash consideration
of ZAR900 million (c.A$100.5* million)
– Acquisition of TWP Holdings (Pty) Limited excludes Basil Read Matomo
Projects (Pty) Limited and TWP Matomo Process Plant (Pty) Limited
which conduct the Basil Read Matomo business as well as TWP
Investments (Pty) Limited and LYT Architecture (Pty) Limited
(previously TPSP Architects (Pty) Limited)
– Basil Read’s strategy to focus on the growth of its engineering
procurement and construction (EPC) business through Basil Read Matomo
and special projects unchanged
– Cash consideration will be applied towards, amongst others, a
reduction of debt, organic growth and capital management initiatives
Marius Heyns, chief executive officer of Basil Read commented: “We are
pleased to announce the acquisition of TWP by WorleyParsons. We believe the
transaction creates value for our shareholders and fits perfectly into our
evolving strategy of an increased focus on our EPC business.”
Mr Heyns added, “We will be able to concentrate on our core business with
increased emphasis on our special projects. In addition, we will focus on
positioning Basil Read for organic growth, reduce our debt levels, and have
sufficient cash reserves to start positioning for the planned local
infrastructure role out which we believe will build momentum during 2013.”
1. INTRODUCTION
Johannesburg - 23 October 2012. Basil Read (JSE:BSR) is pleased to announce
that the Company has entered into a sale of shares agreement (“Sale
Agreement”) dated 23 October 2012 (“Signature Date”) with WorleyParsons
Limited (“WorleyParsons”) whereby WorleyParsons RSA Group (Pty) Limited
(“WorleyParsons SA”), a wholly-owned subsidiary of WorleyParsons, will
acquire the entire issued share capital held by Basil Read in TWP Holdings
(Pty) Limited (“TWP”), for a cash consideration of ZAR900 million
(c.A$100.5* million) (the “Purchase Consideration”), hereinafter the
“Proposed Transaction”.
The Proposed Transaction excludes, amongst others, Basil Read Matomo
Projects (Pty) Limited, TWP Matomo Process Plant (Pty) Limited (together
“Basil Read Matomo”), TWP Investments (Pty) Limited and LYT Architecture
(Pty) Limited (previously TPSP Architects (Pty) Limited), together the
“Excluded Companies”. The Excluded Companies will continue to operate as
wholly-owned subsidiaries of Basil Read, on a standalone basis within the
Group.
2. RATIONALE FOR THE PROPOSED TRANSACTION AND USE OF PROCEEDS
Basil Read regularly reviews its portfolio of businesses with respect to
their competitive position and growth prospects. The Company has been
exploring ways to enable the further growth of TWP. Given the standing of
WorleyParsons in global markets, and the Purchase Consideration, the board
of directors of Basil Read (the “Board”) considered it to be in the best
interest of its shareholders to enter into the Sale Agreement.
In line with its strategy, Basil Read will maintain its growth into EPC
services through its continued ownership of Basil Read Matomo. Basil Read
therefore intends growing the Group’s existing focus areas, namely
construction and contract mining, into sectors that will include energy and
renewables.
Basil Read intends applying the Purchase Consideration towards, amongst
others:
– the reduction of Group debt;
– focussing on organic growth (acquisitive growth opportunities will
also be evaluated where appropriate); and
– capital management initiates.
3. BACKGROUND TO THE PARTIES
3.1 Background to Basil Read
Basil Read is a JSE Limited (“JSE”)-listed company and a leader in the
South African construction sector. It has a proven track record in offering
best-in-class design solutions and the most cost effective construction
techniques. Its subsidiary companies are active in the areas of civil
engineering, road construction, building, mixed integrated housing
developments, property development, bitumen distribution, opencast mining,
blasting operations and engineering design, procurement and construction
management. The Group operates throughout Africa, Australia and South
America.
3.2 Background to TWP
TWP, a wholly-owned subsidiary of Basil Read, is a highly capable resource-
focused engineering project management entity providing a full range of
engineering, and project management solutions to the mining and minerals
industries, and the construction environment. TWP has offices in South
Africa, Australia and Peru.
3.3 Background to WorleyParsons
Australian incorporated and ASX Limited (“ASX”) listed WorleyParsons is a
leading provider of professional services to the energy, resources and
complex process industries. WorleyParsons’s business has been built by
working closely with customers through long-term relationships,
anticipating their needs and delivering inventive solutions through
streamlined, proprietary project delivery systems. With 40,800 employees in
163 offices in 41 countries, including seven offices in South Africa, its
service capability covers the entire project lifecycle: from identifying
the opportunity to the operating phase. WorleyParsons has a market
capitalisation greater than A$6.5 billion, and makes up about 0.55% of the
S&P/ASX 200 index.
4. CONSTITUTION OF SPECIAL COMMITTEE OF THE BOARD
A special committee of the Board comprising the independent directors of
the Board, being Messrs S L L Peteni (Chairman) and C P Davies (the “Special
Committee”), has been tasked with considering the terms and conditions of
the Proposed Transaction.
Though not required under relevant regulations, the Special Committee
appointed Mazars Corporate Finance (Pty) Limited as its independent expert
(“Independent Expert”) to provide it with its opinion whether the terms and
conditions of the Proposed Transaction are fair and reasonable to Basil
Read shareholders.
The Independent Expert has considered the terms and conditions of the
Proposed Transaction, and has expressed an opinion to the Special
Committee, based on the assumptions and other considerations set out in its
opinion.
The Special Committee has reviewed the opinion received from the
Independent Expert, and based on the positive view expressed in that
opinion, has recommended to the Board that the Board call for a meeting of
shareholders of the Company for the shareholders vote on the Proposed
Transaction. The Board recommends that shareholders vote in favour of the
Proposed Transaction in the absence of a superior offer.
5. THE PROPOSED TRANSACTION
5.1 Key Terms of Proposed Transaction
5.1.1 Proposed Transaction Agreement
In terms of the Sale Agreement, WorleyParsons, through WorleyParsons SA,
will acquire the entire issued share capital of TWP from Basil Read on the
implementation date, being the second business day after the fulfilment
(or, if permitted, waiver) of the last of the conditions precedent set out
in paragraph 6 below (“Implementation Date”). Under the terms of the Sale
Agreement the Excluded Companies will have been transferred out of TWP and
back into Basil Read prior to the Implementation Date (“Restructure”).
The warranties and indemnities included in the Sale Agreement are common
for a transaction of this nature.
5.1.2 Key Employees and Employment Agreements
WorleyParsons has identified Nigel Townshend (TWP Chairman), Digby Glover
(TWP Managing Director), Murray MacNab (TWP Executive Director) and Hector
Padres (TWP SúdAmerica Managing Director) as key employees in the
TWP business, each of whom will be required to conclude addenda to their
existing employment agreements (“Employment Agreement Addenda”) to include,
amongst others, a restraint of trade provision for a 12 month period in the
event of a resignation within two years of the effective date of the
relevant Employment Agreement Addenda.
5.1.3 Matomo service agreement and restraint of trade
The Sale Agreement makes provision for TWP executives currently seconded to
Matomo to complete these projects on arms-length terms (“Matomo Service
Agreement”). The agreement also specifically allows for Matomo to provide
EPCM services within the scope of its existing activities, provided any
such services, amongst others, does not exceed a fee threshold of
ZAR100 million, for a period of 36 months from the Implementation Date.
5.1.4 Mutual non-solicitation
Under the terms of the Sale Agreement both parties agree not to solicit,
entice or make any offers of employment to any employee of the other party
for a period of 36 months.
5.2 Effective date of the Proposed Transaction
The effective date of the Proposed Transaction is 1 January 2013 (the
“Effective Date”).
5.3 Purchase Consideration
The Purchase Consideration is payable in cash by WorleyParsons SA
(guaranteed by WorleyParsons) on the Implementation Date, as follows:
– The Purchase Consideration will bear interest from (and including) the
Effective Date to (but excluding) the date of payment thereof at the
ZAR overnight call rate.
– If on the Implementation Date:
- the net debt of TWP (as defined in the Sale Agreement) is more or
less than ZAR0 (zero), then the Purchase Consideration will be
adjusted up or down (as the case may be) by an amount equal to
such net debt;
- the working capital of TWP (as defined in the Sale Agreement) is
more or less than the working capital agreed amount of TWP (as
defined in the Sale Agreement) then the Purchase Consideration
will be adjusted up or down (as the case may be) by an amount
equal to such difference. The Sale Agreement further provides
that if the aforesaid working capital agreed amount is less than
ZAR175 million, the working capital agreed amount will be
ZAR175 million, and in the event that the working capital agreed
amount is greater than R187.5 million, the working capital agreed
amount will be ZAR187.5 million.
6. CONDITIONS PRECEDENT RELATING TO THE PROPOSED TRANSACTION
The implementation of the Proposed Transaction is subject to the fulfilment
of a number of conditions precedent common to a transaction of this nature
including, amongst others:
- within five business days after the Signature Date, WorleyParsons
providing Basil Read with a written guarantee for the Purchase
Consideration;
- all relevant regulatory approvals being obtained for the Proposed
Transaction, including from:
- the JSE by 14 December 2012;
- the South African Reserve Bank exchange control department
by 31 December 2012; and
- the South African Competition Authorities by 15 February 2013.
- Basil Read shareholder approval for the Proposed Transaction by
15 February 2013;
- Basil Read providing a written bank or third party guarantee valid for
two years, to WorleyParsons SA, agreeing payment by the guarantor to
WorleyParsons SA of an amount in the aggregate up to a maximum of 5%
of the Purchase Consideration, to meet the claims of WorleyParsons SA
under the terms of the Sale Agreement, within five business days of
execution of the Employment Agreement Addenda or 12 business days of
the Signature Date, whichever is the later;
- the obtaining of the necessary written consents from the relevant
counter party/ies to all material agreements specified by
WorleyParsons SA who would otherwise be entitled to terminate such
agreements as a result of the Proposed Transaction by
14 December 2012;
- the execution of the Employment Agreement Addenda within five business
days of the Signature Date;
- the Restructure being completed by 14 December 2012;
- WorleyParsons SA making an election whether to exclude
TWP Australia (Pty) Limited from TWP within 14 days of Signature Date;
- the parties agreeing the salient terms of the Matomo Service Agreement
within 10 days of the Signature Date; and
- no material adverse change with regard to the operations, continued
existence, business, condition, assets and/ or liabilities of TWP,
being notified by WorleyParsons to Basil Read within 24 hours after
the fulfilment or waiver, as the case may be, of the last of the other
conditions precedent. To be regarded material, any change much have,
or be reasonably expected to have, an adverse impact on TWP earnings
before interest, tax, depreciation, and amortisation (“EBITDA”) of not
less than 15% when compared to the projected EBITDA for the period
ended 31 December 2012 and/ or 31 December 2013.
Each of Basil Read and WorleyParson SA must use its reasonable endeavours
to procure the fulfilment of the above conditions precedent on or before
the dates stipulated.
7. PRO FORMA FINANCIAL EFFECTS AND SALIENT DATES AND TIMES RELATING TO THE
PROPOSED TRANSACTION
The pro forma financial effects of the Proposed Transaction on the reported
financial information of Basil Read, as well as the salient dates and times
relating to the implementation of the Proposed Transaction will be
announced to shareholders in due course.
8. CATEGORISATION OF THE PROPOSED TRANSACTION
The Proposed Transaction constitutes a category 1 disposal for Basil Read
under the provisions of section 9.5(b) of the Listings Requirements of the
JSE.
9. CIRCULAR
A circular containing full details of the Proposed Transaction and
incorporating a notice of general meeting of Basil Read shareholders will
be posted to shareholders, in due course.
10. RENEWAL OF CAUTIONARY ANNOUNCEMENT
Basil Read shareholders are referred to the cautionary announcements
released by the Company on the Securities Exchange News Service on Monday,
02 July 2012, Tuesday, 14 August 2012, Thursday, 23 August 2012 and Friday,
5 October 2012, respectively, and are advised that as the pro forma
financial effects of the Proposed Transaction are still being determined,
which may have a material effect on the price of Basil Read shares,
shareholders are accordingly advised to continue to exercise caution when
dealing in Basil Read’s securities until a further announcement is made.
Johannesburg
23 October 2012
* Exchange rate applied: ZAR8.95515:A$1
For further information please contact:
Marius Heyns
Chief Executive Officer: Basil Read
Office: +27 11 418 6300
Financial Adviser, JSE Sponsor and JSE Transaction Sponsor
Macquarie First South Capital (Pty) Limited
Legal advisers
Werksmans Attorneys
Independent Expert
Mazars Corporate Finance (Pty) Limited
Investor Relations Advisers
College Hill (Pty) Limited
Date: 23/10/2012 10:59:00 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.