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Terms Regarding The Category 2 Acquisition Of A Shareholding In Control Instruments Group Limited
TORRE INDUSTRIAL HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number: 2012/144604/06)
Share code: TOR
ISIN: ZAE000169322
(“Torre” or “the Company” or “the Group”)
TERMS REGARDING THE CATEGORY 2 ACQUISITION OF A SHAREHOLDING
IN CONTROL INSTRUMENTS GROUP LIMITED (“CONTROL INSTRUMENTS”),
FURTHER CAUTIONARY ANNOUNCEMENT AND NEW CAUTIONARY
ANNOUNCEMENT
INTRODUCTION
Torre is pleased to advise that it has acquired, via its 100%
subsidiary Torre Holdings (Pty) Ltd, a 34.26% interest in
Control Instruments for cash (the “CI Shares”) from R Friedman
and certain of his associates as well as from Westbrooke
Capital Management Special Opportunities En Commandite
Partnership at a purchase price of R1.38 per share, totalling
R65 259 520, herein after referred to as the “Transaction”.
The Transaction was agreed upon on 11 December 2013.
Financing for the Transaction was provided by AfrAsia Special
Opportunities Fund Ltd.
NATURE OF THE BUSINESS OF CONTROL INSTRUMENTS
Control Instruments is the holding company of Control
Instruments Automotive (Pty) Ltd (“CI Automotive”) and
Control Instruments Automotive Plastics (Pty) Ltd (“CI
Automotive Plastics”). Both companies manufacture and/or
market, sell and distribute premium branded automotive
aftermarket products directly and/or indirectly into sub-
Saharan Africa.
The automotive aftermarket is the secondary market of the
automotive industry concerned with the supply of automotive
products after the sale of the vehicle to the end-user. CI
Automotive typically services the replacement parts market
for vehicles older than five years.
CI Automotive, based in Johannesburg with a manufacturing
operation in Cape Town, distributes a basket of products
marketed under brand names which it either owns or exclusively
represents. These include the well-known brands Gabriel,
Autocom, Echlin, VDO, Textar, Mag-Brakes, Warn, Hi-Lift,
VisionX and Truck-Lite. Gabriel, the flagship brand of CI
Automotive is designed, developed and manufactured at CI
Automotive’s facility in Retreat, Cape Town. CI Automotive
Plastics, based in Port Elizabeth, is a manufacturer of
automotive battery cases for some of the leading automotive
battery brands in sub-Saharan Africa.
The value proposition which CI Automotive brings to its
customers is a premium branded product, recognisable and
trusted by the consumer, supported by the requisite level of
technical service and back up expected from a premium branded
product together with application and installation training.
RATIONALE FOR THE TRANSACTION
The Transaction:
• Is earnings accretive for Torre;
• Provides additional scale to the Group;
• Provides the Group with diversification of its industry
exposure to include the automotive sector, alongside its
existing exposures to the mining, construction and
agricultural sectors; and
• Creates an associate business within the Group that is well
established and has a high quality management team.
There are no warranties given, nor outstanding conditions
precedent in respect of the Transaction.
CATEGORISATION OF THE TRANSACTION
The Transaction has been categorised as a Category 2
acquisition in terms of the JSE Listings Requirements. It is
therefore not subject to the approval of Torre shareholders
and accordingly no circular to shareholders is required. None
of the parties are related to Torre.
In accordance with section 122 of the Companies Act, No. 71 of
2008, Torre has notified Control Instruments of the
Transaction.
PRO FORMA FINANCIAL EFFECTS
The unaudited pro forma financial effects of the Transaction
on Torre shareholders are the responsibility of the Torre
directors and have been prepared for illustrative purposes
only to provide information about how the Transaction may
affect the financial position and results of Torre and,
because of its nature, may not give a fair reflection of
Torre’s financial position and results after the Transaction.
Before the Effect of the After the % change
Transaction1 Transaction2,3 Transaction
Profit for the
period (R’000) 4 999 3 099 8 098 62%
Headline
earnings for the
period (R’000) 3 724 3 090 6 814 83%
Net asset value
per share
(cents) 96.6 - 96.6 -
Net tangible
assets value per
share (cents) 57.7 (9.4) 48.3 (16%)
Basic earnings
per share
(cents) 5.8 3.6 9.4 62%
Headline
earnings per
share (cents) 4.3 3.6 7.9 84%
Weighted average
number of shares
in issue during
the period 86 353 688 - 86 353 688 -
Actual shares in
issue at the end
of the period 180 316 308 - 180 316 308 -
Notes and assumptions:
1. The amounts set out in the “Before the Transactions” column
above have been extracted from the audited results of Torre
for the year ended 30 June 2013.
2. The Control Instruments financial information has been
extracted from the audited year end results for 31 December
2012 as well as the unaudited interim results for the period
ended 30 June 2013.
3. The Transaction accounts for the purchase of 47 289 507 CI
Shares at a price of R1.38 per share.
4. The aggregate investment of R65 259 520 is assumed to have
been funded through third party interest-bearing debt at a
cost of debt of 8.5% in respect of the year ended 30 June
2013.
5. It has been assumed that the Transaction was implemented on
30 June 2013 for purposes of compiling the statement of
financial position and on 1 July 2012 for purposes of
compiling the statement of comprehensive income.
6. Tax consequences in relation to the Transaction have been
taken into account.
7. All adjustments, other than transaction fees, will have a
continuing effect.
FURTHER CAUTIONARY ANNOUNCEMENT
In addition to the above Transaction and further to the
cautionary announcement published on 2 December 2013,
shareholders are advised that Torre is considering further
acquisitions of Control Instruments shares in order to
increase its interest to between 51% and 100%. Torre has
obtained irrevocable support from certain major shareholders
of Control Instruments that will enable it to acquire a
majority interest in Control Instruments should it choose to
proceed. Once the details of this potential further investment
are determined, shareholders will be notified.
NEW CAUTIONARY ANNOUNCEMENT
Shareholders are further advised that Torre is in advanced
negotiations to acquire an equipment and spare parts
distribution business in West Africa. If these negotiations
are successfully concluded, it may have a material effect on
the price of Torre’s securities. Accordingly, shareholders are
advised to exercise caution when dealing in Torre’s securities
until a full announcement is made.
Johannesburg
12 December 2013
Corporate Adviser to Torre
AfrAsia Corporate Finance (Pty) Limited
Designated Adviser
PSG Capital (Pty) Limited
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