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Interwaste acquires the Enviro-Waste Waste Collection and Disposal Customer Base and Related Assets
INTERWASTE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2006/037223/06)
Share code: IWH
ISIN: ZAE000097903
("Interwaste")
INTERWASTE ACQUIRES THE ENVIRO-WASTE WASTE COLLECTION AND DISPOSAL CUSTOMER BASE AND
RELATED ASSETS
1. Introduction
Interwaste is pleased to advise shareholders that Enviro-Fill (Pty) Ltd (“Enviro-
Fill”), a wholly owned subsidiary company, has entered into a transaction to acquire
the Enviro-Waste (Pty) Ltd (“Enviro-Waste”) waste collection and disposal customer
base and the related assets used for the collection and disposal of waste, effective
1 March 2013("the Transaction").
2. Salient features of the Transaction
2.1 Enviro-Fill will acquire the Enviro-Waste customer base and related assets for a
total consideration of R14 million, to be funded from existing facilities and cash
resources.
2.2 The consideration is comprised as follows:
- R5 million is the cost of the waste collection and disposal assets to be
acquired. The parties to the Transaction have agreed a price per asset for the
individual assets assessed as being in a reasonable condition, and the final
amount to be paid will depend on the number of assets in reasonable condition
received or verified by Enviro-Fill;
- The balance of R9 million of the consideration relates to the customer base. R1.5
million of the amount will only be payable if specified revenue targets for the
customer base are met over the 12 month period subsequent to its acquisition by
Enviro-Fill. Should the achieved revenue for the period be lower than the agreed
target, the amount of R1.5 million will reduce to zero over a range of revenue
below the targeted amount;
- R4.5 million is payable within 7 days of the effective date of the Transaction, a
further R4.5 million is payable within 37 days of that date and the balance of
the consideration is payable over 36 months with no interest thereon.
3. About Envirowaste
Envirowaste was founded in 1992. The company’s business comprises waste collection and
disposal, related services, and plant hire. The plant hire business has grown rapidly
in recent years and management has elected to focus on this business and to dispose of
the waste collection and disposal customer base.
4. Rationale for the Transaction
Interwaste is acquiring a niche, long standing, profitable customer base together with
the assets necessary to service the customers. The Transaction will enable Interwaste
to grow its business on a relatively low risk basis, with opportunities for synergies
between the businesses.
5. Conditions precedent to the Transaction
The Transaction is subject to the condition precedent that there are no insolvency
actions arising against Enviro-Waste after publication of the notices specified in
the Insolvency Act, for the time periods required.
6. Conditions subsequent to the Transaction
Final determination of the amount to be paid for the related assets acquired, based on
the number of assets in reasonable condition that are either received or verified by
Enviro-Fill.
7. Pro forma financial effects
The unaudited pro forma financial effects have been compiled from the unaudited
consolidated financial statements of Interwaste for the six months ended 30 June 2012.
The pro forma financial effects of the Transaction on earnings, headline earnings,
diluted earnings and diluted headline earnings per share, as if the Transaction had
taken effect on 1 January 2012, have not been presented as these are not considered
significant (a change of 3% or more being considered ‘significant’). The unaudited pro
forma financial effects, for which the directors are responsible, are provided for
illustrativepurposes only, to show the effect of the Transaction on the net asset
value and net tangible asset value per share, as if the Transaction had taken effect
on 30 June 2012. Because of their nature, the unaudited pro forma financial effects
may not give a fair presentation of Interwaste’s financial position. The unaudited
pro forma financial effects were calculated in a manner consistent with Interwaste’s
accounting policies and have been adjusted as described in the notes below.
Before the the After the Change
Transaction(Note Transaction
1) (Note 2 and 3)
Net asset value share 71.90 71.90 0%
(cents)
Net tangible asset value 57.60 55.10 (4.3)%
per share(cents)
Shares in issue(`000) 329 311 329 311
Notes:
1. The "Before the Transaction" column reflects the unaudited consolidated statement
of financial position of Interwaste as at 30 June 2012.
2. The "After the Transaction" column reflects what the unaudited consolidated net
asset value and net tangible asset value per share would have been, had the
Transaction been effective as at 30 June 2012.
3. The consideration for the transaction has been split between property, plant and
equipment and goodwill, as detailed in paragraph 2.2 above.
4. Accounting policies have been applied consistently to the 'Before the transaction'
and the 'After the transaction' numbers.
7. Categorisation of the Transaction and withdrawal of cautionary announcement
In terms of the Listings Requirements, the Transaction is categorised as a Category 2
transaction.
Shareholders are referred to the cautionary announcement published by Interwaste on
25 January 2013 and are advised that having regard to the above, caution is no longer
required when dealing in the Company's securities.
Johannesburg
1 March 2013
Designated advisor:
Grindrod Bank Limited
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