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Final terms announcement
LABAT AFRICA LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1986/001616/06)
(“Labat” or “the Company”)
ISIN Code: ZAE 000018354 Share code: LAB
FINAL TERMS ANNOUNCEMENT REGARDING THE ACQUISITION OF REINHARDT
TRANSPORT GROUP (“RTG”) BY LABAT AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
Shareholders are referred to the Company?s announcements of 22 April 2015 and
18 May 2015 regarding Labat?s intention to acquire RTG. Shareholders are advised
that Labat and RTG have now concluded an agreement for the acquisition subject
to certain conditions precedent (“the Transaction”).
Amended terms of the Transaction
Labat will acquire 100% of RTG for a consideration of R645 million. It is intended that
the financing will be structured by way of R325 million of debt and the balance
through a Private Placement of shares in Labat. Labat intends issuing 240 million
new Labat shares at 150 cents per share to settle the balance of the cash
consideration. The Effective date of the Transaction is 1 August 2015.
Shares will be issued by way of a Private Placing with a preference given to BEE
investors, existing Labat shareholders and the RTG vendors and management. The
total number of shares in issue in Labat post the Transaction will be approximately
500 000 000 (five hundred million). The rationale for the Private Placement being
offered to primarily BEE investors is due to the intention to retain Labat?s Level 1 BEE
rating post the Transaction.
As part of the restructuring of the RTG business:
. Mr Derick Reinhardt and management will retain a substantial shareholding in
Labat for a minimum period of 18 months.
. The shareholding retained by management and Mr Derick Reinhardt will be
vended in at the subscription consideration.
. Mr Derrick Reinhardt will be appointed as a Non-executive director on the
board during the handover period.
. Mr Reinhardt will provide strategic input and facilitate a smooth handover.
Rationale for the Transaction
The rationale for the Transaction is in line with Labat?s strategy to be a leading
transport and logistics company operating in South Africa and sub-Saharan Africa
providing transport infrastructure related services. This will be the first acquisition in
line with this strategy.
Conditions precedent
The Transaction is subject to regulatory approvals, including JSE and Competition
Commission approvals, as well as approval by the directors and shareholders of
Labat and RTG.
Pursuant to the approval of the Transaction and associated resolutions, Labat will
be making an application for a transfer of its listing to the Main Board of the JSE
Limited.
Financial information
The financial information in relation to RTG is set out below:
RTG 31 July 2014 July 2015
Year end projections
Turnover: R1.5bn R1.5bn
EBITDA R316m R335m
Net profit after taxation (“NPAT”) R60.8m R100.7m
Adjusted sustainable net profit after R98.3m R107.9m
taxation (“ANPAT”)*
Net asset value R314m R415m
* - adjusted for once-off non-recurring items.
The expected financial impact of the Transaction on Labat, including the intended
Private Placement is estimated below:
Labat 31 July 2014 July 2015
Year end projections
Shares in Issue (fully diluted) 500m 500m
Assumed after tax interest charge on debt N/A R24.6m
raised for full year
EPS (based on NPAT after interest) 8 cents 16 cents
EPS (based on ANPAT after interest) 16 cents 17 cents
PE Multiple on NPAT (based on 150 cents) 19.0 9.0
PE Multiple on ANPAT (based on 150 cents) 9.5 8.8
Industry PE multiple Average 12 12
Potential investors subscribing at 150 cents per share do so at a PE multiple of
approximately 9.1 and 8.7 on adjusted sustainable net profit with an industry PE
multiple averaging 12, which implies a potential discount of between 25% and 30%.
Furthermore, Labat„s level 1 BEE credentials will add additional potential to the
business post the Transaction as certain contracts and opportunities were not
previously available to the company. The immediate focus will be to target
substantial new contracts which require improved and essential BEE input. The new
BEE status is expected to further enhance and expand existing client contracts.
Labat?s overall strategy is to create a large BEE transport and logistics business
through a combination of organic and acquisitive growth. RTG will form the core of
the business strategy and expansion with many further opportunities available.
To assist with the growth strategy, Global Emerging Market (“GEM”), a USA based
private equity fund has extended its funding commitment with an equity facility of
$100 million (R1.2 billion) to Labat for a further five years, to fund further acquisitions
in the transport and logistics sector.
The details of the placing will be communicated in due course and interested
participants are encouraged to contact the Company?s sponsor to register an
interest on 011 480 8500 with Michelle Krastanov or Kay Stoler.
Categorisation and documentation
The Acquisition is classified as a Category 1 transaction in terms of the JSE Listings
Requirements and will constitute a reverse listing, which will require JSE approval as
previously announced.
Shareholders are thus advised that the preparation of a circular, containing full
details of the Transaction, will now commence and it is expected that the circular,
incorporating a notice of General Meeting will be posted within 60 days of this
announcement.
Post the Transaction; RGT will become a subsidiary of Labat. Accordingly, Labat will
ensure that the provisions of the RGT memorandum of incorporation do not frustrate
or relieve Labat in any way from compliance with its obligations in terms of the JSE
Listings Requirements.
Withdrawal of cautionary announcement
Following the release of this announcement, the cautionary announcement is
hereby withdrawn.
Johannesburg
12 June 2015
Sponsor
Arbor Capital Sponsors Proprietary Limited
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