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ONELOGIX GROUP LIMITED - Acquisition of additional shares in subsidiaries from related parties

Release Date: 30/05/2014 14:25
Code(s): OLG     PDF:  
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Acquisition of additional shares in subsidiaries from related parties

ONELOGIX GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/004519/06)
JSE share code: OLG ISIN: ZAE000026399
(“OLG” or the “group”)


ACQUISITIONS OF ADDITIONAL SHARES IN SUBSIDIARIES FROM RELATED PARTIES


INTRODUCTION

Shareholders are advised that OLG has concluded the following agreements;

-   an agreement with the trustees for the time being of the Denmar Trust (Master’s Reference Number
    IT925/2007) (“Denmar Trust”) to acquire the Denmar Trust’s shareholding (25%) in and claims against
    Commercial Vehicle Delivery Services Limited (“CVDS”) for a purchase consideration of R14 250 000
    (“CVDS transaction”). OLG, through its wholly owned subsidiary OneLogix (Pty) Limited (“OLPL”),
    currently owns 75% of CVDS and together with OLPL will own 100% of CVDS after the CVDS
    transaction is implemented; and
-   an agreement with Tanker Solutions Proprietary Limited (“Tanker Solutions”) to acquire part of Tanker
    Solutions’ shareholding (14%) in and claims against United Bulk Proprietary Limited (“United Bulk”) for
    a purchase consideration of R13 000 000 (“United Bulk transaction”). OLG, through its wholly owned
    subsidiary OLPL, currently owns 60% of United Bulk and together with OLPL will own 74% of United
    Bulk after the United Bulk transaction is implemented,

    (collectively, the “transactions”).

RATIONALE FOR THE TRANSACTIONS

CVDS and Vehicle Delivery Services (a Division of OLPL) are businesses which operate in the same industry
and share the same customers and infrastructure in many instances. In order to maximise synergies going
forward, an alignment of management interests and shareholder interests was preferable. It also made sense for
Dirk van der Zee, who is a beneficiary of the Denmar Trust and a director of CVDS, to diversify his investment
into the group and to liquidate some of his investment at this stage of his career, and to remain significantly
invested at the same time.

OLG has increased its investment in United Bulk for similar reasons, as the business has become an integral
part of the group and in order to maximise returns from continued capital investment in United Bulk off the
group’s balance sheet. The United Bulk transaction allows Patrick Pols (“Patrick”) and Mitzi Vosloo (“Mitzi”),
the directors of United bulk to diversify their investment into OLG, and at the same time remain well invested
in United Bulk.

TERMS AND CONDITIONS PRECEDENT OF THE TRANSACTIONS

The purchase consideration for the CVDS transaction will be settled as follows:

- a cash payment of R5 250 000 to the Denmar Trust; and
- in respect of the balance of R9 000 000, by the allotment and issue by OLG to the Denmar Trust of 2 571
  428 fully paid up OLG shares, at an issue price of R3.50 per OLG share.

If the CVDS transaction has not completed by the third business day following the fulfilment or waiver of the
condition precedent or should OLG fail to pay the cash component of the purchase consideration on or before
30 June 2014, interest shall accrue thereon at an interest rate of 6% nominal annual compounded monthly, in
arrears.

All conditions precedent relating to the CVDS transaction have been fulfilled and accordingly the transaction 
is unconditional.

The purchase consideration for the United Bulk transaction will be settled through the allotment and issue of
3 714 285 fully paid up OLG shares to Tanker Solutions, at an issue price of R3.50 per OLG share for a
purchase consideration of R13 000 000 of which 371 429 OLG shares, constituting 10% of the purchase
consideration, will be delivered to Tanker Solutions’ nominee, Mitzi. The remaining 90% of the purchase
consideration will be delivered to Tanker Solutions, of which Patrick is the sole beneficiary.

All conditions precedent relating to the United Bulk transaction have been fulfilled and accordingly the
transaction is unconditional.

FINANCIAL EFFECTS

The unaudited pro forma financial effects of the transactions, on an aggregate basis and a stand-alone basis, 
on OLG’s basic and diluted basic earnings per share, headline and diluted headline earnings per share, net asset
value and net tangible asset value per share, based on OLG’s unaudited condensed consolidated interim results
for the six months ended 30 November 2013, are not significant and are accordingly not presented.

CATEGORISATION OF THE TRANSACTIONS AND RELATED PARTY CONSIDERATIONS

In respect of the CVDS transaction, taking into consideration:
    - the purchase consideration of the CVDS transaction being R14 250 000;
    - the Denmar Trust is a 25% shareholder of CVDS;
    - that a beneficiary of the Denmar Trust is Dirk van der Zee who is a director of CVDS; and
    - that OLPL, a wholly owned subsidiary of OLG, currently owns 75% of CVDS’ issued share capital,
the CVDS transaction constitutes a small related party transaction in terms of section 10.7 of the JSE Listings
Requirements.

In respect of the United Bulk transaction, taking into consideration:
    - the purchase consideration of the United Bulk transaction being R13 000 000;
    - that Mitzi is a director of United Bulk;
    - that Patrick is a director of United Bulk; and
    - that OLPL, a wholly owned subsidiary of OLG, currently owns 60% of United Bulk’s issued share
        capital,
the United Bulk transaction constitutes a small related party transaction in terms of section 10.7 of the JSE
Listings Requirements.

A small related party transaction is not subject to shareholder approval, provided an independent expert has
confirmed that the terms of the transaction are fair as far as shareholders are concerned.

FAIRNESS OPINION

Merchantec Proprietary Limited (“Merchantec Capital”), who were appointed as the independent expert by
OLG, have concluded that the terms of the CVDS transaction and the United Bulk transaction are fair to OLG
shareholders. A copy of Merchantec Capital’s reports will be available for inspection at the offices of OLG 
(46 Tulbagh Road, Pomona, Kempton Park, 1620) for a period of 28 days from the date of this announcement.


30 May 2014


Corporate advisor and sponsor                     
Java Capital

Independent expert
Merchantec Capital

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