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Announcement regarding the disposal of the West African Group division and withdrawal of cautionary announcement
METMAR LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/007269/06)
Share code: MML
ISIN code: ZAE000078747
("Metmar" or "the Company")
ANNOUNCEMENT REGARDING THE DISPOSAL OF THE WEST AFRICAN GROUP
DIVISION AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Metmar shareholders (“Shareholders”) are advised that Metmar’s wholly-owned
subsidiary, Metmar Trading Proprietary Limited (“Metmar Trading” or “the Seller”), has
entered into a sale of business agreement dated 21 June 2013 (“Agreement”) with West
African International Proprietary Limited (“WAI”). In terms of the Agreement, Metmar
Trading will dispose of the division known as West African Group (“WAG”) to WAI (“the
Disposal”).
SNF International Proprietary Limited, which together with WAG, formed part of
Metmar’s Polychem division will be retained by Metmar Trading.
2. Nature of business of WAG
WAG specialises in the trading and supply of plastic raw materials, rubber and rubber
chemicals.
3. Rationale for the Disposal
Further to the strategic reassessment and alignment of the Metmar Group, Metmar and
WAG management (“WAG Management”) had differing views about the future growth
path of the WAG business. In order to bridge this gap, various options were considered
and evaluated, including the staged acquisition of a controlling interest by WAG
Management, but the Disposal was considered the most beneficial transaction for
Shareholders, Metmar and WAG Management.
The Disposal will allow Metmar management to devote further focus to its core metals
and minerals trading business whilst also freeing up existing banking and trade finance
facilities for use elsewhere in the core metals and minerals trading business.
4. Consideration and terms of the Disposal
The consideration for the Disposal is R 50 million plus the movement in the net asset
value of WAG for the period between 1 March 2013 and 1 July 2013 to a maximum of
R 20 million (estimated to be in the order of R 5 million), and will be settled in cash.
The cash received will be utilised to reduce Metmar group’s debt and trade finance
facilities.
5. Suspensive conditions and effective date
The Disposal is effective on 1 July 2013, and is subject to the fulfilment or waiver (where
applicable) of the following key suspensive conditions by no later than 28 June 2013:
• WAI shall have delivered to the Seller proof, to the Seller’s reasonable satisfaction,
that:
o all the existing banking and trade finance facilities of Metmar Trading which are
utilised in relation to the WAG business have been replaced or will be replaced
by new banking and trade finance facilities of WAI by no later than the
commencement of business on 3 September 2013, at no cost to Metmar Trading;
and
o all guarantees, suretyships and other securities given by Metmar Trading or any
other member of the Metmar group in relation to the WAG business, have been
cancelled or will be cancelled by no later than the commencement of business on
3 September 2013, at no cost to Metmar Trading; and
• WAI, together with its shareholders, shall have entered into a guarantee and
indemnity agreement in terms of which they jointly and severally:
o guarantee the aforementioned obligations and any obligations in respect of open
forward exchange contracts attributable to the WAG business (“Guaranteed
Obligations”) in favour of Metmar Trading; and
o indemnify Metmar Trading against any claim, loss, liability, damage or cost
(including legal costs on a scale as between an attorney and his own client)
which it may suffer or incur in connection with the guaranteed obligations and/or
WAI’s failure to comply therewith.
6. Unaudited pro forma financial effects (“Financial Effects”)
The Financial Effects of the Disposal on Metmar’s basic loss per share (“LPS”), headline
loss per share (“HLPS”), net asset value per share (“NAVPS”) and net tangible asset
value per share (“NTAVPS”) are set out below. The Financial Effects have been
prepared for illustrative purposes only, to assist Shareholders in assessing the impact of
the Disposal on Metmar’s LPS, HLPS, NAVPS and NTAVPS and, because of their
nature, do not necessarily fairly present Metmar’s financial position, changes in equity,
results of operations or cash flows after the Disposal. The Financial Effects are the
responsibility of the directors of Metmar.
Before the After the Change
(1) (2)
Disposal Disposal
%
(3)
LPS (cents) (39.5) (53.0) 34.18
(3)
HLPS (cents) (32.4) (39.7) 22.53
(4)
NAVPS (cents) 241.07 236.01 (2.10)
(4)
NTAVPS (cents) 184.90 197.62 6.88
Weighted average number of shares in issue 255 461 640 255 461 640 -
during the Period (as defined below)
Shares in issue at 28 February 2013 267 306 552 267 306 552 -
Notes:
1. Based on Metmar’s audited results for the year ended 28 February 2013 (“the Period”).
2. Based on the assumption that the Disposal took place on 1 March 2012 for statement of
comprehensive income purposes and 28 February 2013 for statement of financial position
purposes.
3. LPS and HLPS have been adjusted for the following:
• the reversal of WAG’s contribution to earnings and headline earnings for the Period of
R 18.8 million;
• a profit on sale of operations of R19.2 million;
• interest of R 5.2 million calculated at an average rate of 9.5% no longer incurred following the
utilisation of the cash consideration to reduce the Metmar group’s debt and trade finance
facilities;
• the write off of goodwill and intangibles of R47.5 million; and
• taxation and deferred taxation of R7.5 million.
4. The NAVPS and NTAVPS have been adjusted to include the following:
• the reversal of the net assets attributable to WAG as at 28 February 2013 of R 30.8 million and
items included in 3 above.
5. The Financial Effects have been based on an estimated cash consideration of R 55 million.
7. Categorisation and withdrawal of cautionary announcement
The Disposal is a Category 2 transaction in terms of the JSE Limited Listings
Requirements and does not require shareholder approval.
Shareholders are referred to the cautionary announcement published on the Stock
Exchange News Service on 21 May 2013 and are advised that further to the information
contained in this announcement, Shareholders are no longer required to exercise
caution when dealing in their Metmar securities.
Johannesburg
25 June 2013
Sponsor
One Capital
Legal Advisors
Read Hope Phillips
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