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Inter-Group Disposal and Acquisition
Curro Holdings Limited
Incorporated in the Republic of South Africa
Registration number: 1998/025801/06
Share code: COH
ISIN: ZAE000156253
(“Curro” or “the Company”)
INTER-GROUP DISPOSAL AND ACQUISITION
1. INTRODUCTION
Shareholders are hereby advised that Curro Holdings has concluded an
inter-group restructuring transaction which effectively results in:
1.1 Educatum Management Services Proprietary Limited(“Educatum”), being a
wholly owned subsidiary of Curro, which provides management services to
Meridian College Schools NPC (“Meridian College Schools”) being sold to
Meridian College Schools for a consideration of R25 000 000 (“the
Disposal”), which consideration was settled in cash on 7 December 2012.
The proceeds of this Disposal will be used to settle existing liability
of Curro and for ongoing working capital requirements of Curro; and
1.2 Meridian College Schools selling its movable assets and intangible
assets to Campus and Property Management Company Proprietary Limited
(“CAPMAC”), being a subsidiary of Curro, of which Curro holds 65% and
the trustees for the time being of the Schools and Education Investment
Impact Fund of South Africa (“the Schools Fund”) holds 31.7% and Old
Mutual Life Assurance Company South Africa Limited (“OMLACSA”) holds
3.3%, for a consideration of R25 000 000 (“the Acquisition”), which
consideration was settled in cash on 7 December 2012. The proceeds of
the Acquisition was utilised by Meridian College Schools to settle the
consideration due to Curro in respect of the Disposal.
The Disposal and the Acquisition (collectively “the Transaction”)are
indivisible transactions, with the one being conditional upon the
implementation of the other.
2. BACKGROUND INFORMATION ON MERIDIAN COLLEGE SCHOOLS
Meridian College Schools is a non-profit company which was established and
incorporated under the previous Company Act 61 of 1973. Curro purchased
the entire shareholding in Educatum in or about March 2012. As part of the
aforegoing transaction, Curro, or its nominee, acquired the right to take
transfer of the membership interest in Meridian College Schools and Curro
acquired the right to appoint all directors of Meridian College Schools.
3. RATIONALE FOR THE TRANSACTION
As previously advised to shareholders, Curro, the Schools Fund and
OMLACSA have, as part of a joint venture, established an operating
company, namely Meridian Community Academy NPC (RF) (“the Meridian
Community Academy”), that will operate schools and CAPMAC that will
provide the school facilities and premises for such schools, with
Curro being appointed as the manager of the schools. The Meridian
Community Academy will focus on providing affordable, quality
private schooling to students where the majority of parents earn
less than a defined threshold, currently R200 000 (two hundred
thousand rand) per annum. The existing brand and product offering
of Meridian College Schools is therefore aligned to the strategy and
product offering of the new Meridian Community Academy. The board
of Curro is accordingly of the view that the internal restructuring
will consolidate the similar product offerings of the two Meridian
companies under one brand, being that of the new Meridian Community
Academy, which is in line with the strategy of Curro going forward.
4. SMALL RELATED PARTY TRANSACTION
Since AJF Greyling, HG Louw, B van der Linde and CR van der Merwe are
directors of both Meridian College Schools and Curro, the Transaction is
technically viewed as a transaction between Curro and a related party and
classified as a small related party transaction in term of the
Listings Requirements of the JSE Limited (“Listings Requirements”).
The Listings Requirements accordingly require written confirmation
from an independent professional expert, confirming that the
Transaction is fair to Curro’s shareholders. Mazars Corporate
Finance (Pty) Ltd has been appointed as the independent professional
expert acceptable to the JSE, for the purposes of preparing such a
fairness opinion in relation to the Transaction. Upon completion of
the fairness opinion same will be available for inspection at the
Company’s registered office until 31 January 2013. In the unlikely
event that the outcome of the fairness opinion should be that the
Transaction is unfair to shareholders, shareholder approval of the
Transaction will be required. Curro has secured an irrevocable
undertaking from a shareholder who is eligible to vote and who holds
in excess of 50% of the shareholding in Curro, to vote in favour of
any such resolution to approve the Transaction should same become
necessary.
5. CONDITIONS AND OTHER MATERIAL TERMS
5.1 All conditions precedent to the implementation of the Transaction
have been fulfilled. The effective date of the Transaction was
the first business day following the fulfilment of the conditions
precedent, being 7 December 2012.
5.2 The Transaction is subject to the fulfilment of, inter alia, the
following resolutive conditions by no later than 15 May 2013,
failing which the agreements regulating the Transaction shall
cease to have any further force or effect and the Parties shall be
entitled to be restored as nearly as possible to the position in
which they would have been, had such agreements not been entered
into:
5.2.1 Meridian College Schools is to have ceded and transferred or
procured the cession and transfer of the rights and obligations
under all lease Agreements (“the Lease Agreements”)concluded by
Educatum, as tenant, to CAPMAC;
5.2.2 Meridian College Schools is to have procured the approval of
the Department of Education for the transfer of the school
registration/licences and subsidies, which has been granted to
Meridian College Schools by the Department of Education, from
Meridian College Schools to Meridian Community Academy; and
5.2.3 a fairness opinion is to be obtained in regard to the purchase
price payable for the Transaction which has been approved by the
JSE Limited (“the JSE”) and has complied with all other
requirements of the Listings Requirements in relation to the
Transaction, including, to the extent required, obtaining any
shareholder approval for the Transaction.
6. FINANCIAL EFFECTS
The pro forma financial effects of the Transaction are presented
for illustrative purposes only and because of their nature may not
give a fair reflection of the Company’s financial position or of
the effects on future earnings after the Transaction.
Set out below are the unaudited pro forma financial effects of the
transaction, based on the unaudited interim results for the period
ended 30 June 2012. The directors of Curro are responsible for the
preparation of the unaudited pro forma financial information.
Unaudited Pro Change Pro forma Change
before the forma (%) after the (%)
Transaction after Transaction
the
Disposal
Basic loss
per share
(cents)
(1.8) (2.2) na (2.0) na
Headline
loss per
share
(cents)
(1.9) (2.2) na (2.1) na
Basic loss
(R’000) (2,982) (3,484) na (3,300) na
Headline
loss
(R’000)
(3,086) (3,588) na (3,404) na
Net asset
value per
share
(cents)
228.4 228.4 - 228.4 -
Net
tangible
asset value
per share
(cents)
123.0 123.9 1% 123.6 0.5%
Weighted
average
Number of
shares in
issue
(millions)
161.2 161.2 - 161.2 -
Number of
shares in
issue
(millions)
161.2 161.2 - 161.2 -
Notes:
1. The “Unaudited before the Transaction” column has been
extracted from the published unaudited interim results for
Curro for the six-month period ended 30 June 2012.
2. The basic and headline (loss)/earnings per share figures
in the “Pro forma after the Disposal” and the “Pro forma
after the Transaction” columns have been calculated on the
basis that the Transaction was effected on 1 January 2012.
3. The net asset value per share and net tangible asset value
per share figures in the “Pro forma after the Disposal”
and the “Pro forma after the Transaction” columns have
been calculated on the basis that the Transaction was
effected on 30 June 2012.
4. The taxation rate applicable is assumed to be 28%.
5. As the results of Meridian College Schools were only
included in the “Unaudited before the Transaction” column
from 1 April 2012, this was consistently applied for the
pro forma calculations.
Durbanville
12 December 2012
Sponsor
PSG Capital
Date: 12/12/2012 11:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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