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LABAT AFRICA LIMITED - Amended terms announcement regarding the Acquisition of Reinhardt Transport Group Pty Ltd

Release Date: 15/10/2015 10:08
Code(s): LAB     PDF:  
Wrap Text
Amended terms announcement regarding the Acquisition of Reinhardt Transport Group Pty Ltd

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

AMENDED TERMS ANNOUNCEMENT REGARDING THE ACQUISITION OF REINHARDT TRANSPORT
GROUP PROPRIETARY LIMITED (“RTG”) AND OTHER INFORMATION


Shareholders are referred to the Company’s announcements of 22 April 2015, 18 May 2015
12 June 2015, 10 July 2015 and 11 September 2015 regarding Labat’s intention to acquire
100% of RTG. Shareholders are advised that Labat and the RTG Vendors have now
concluded an amended agreement incorporating improved terms for the acquisition. The
acquisition of RTG remains subject to shareholder approval.

Amended terms of the Transaction
Labat will acquire 100% of RTG for a subscription consideration of R560 million. The vendor
has agreed to finance a portion of the subscription consideration by way of a vendor loan
to the value of R275m on deferred payment terms.

The RTG Vendors, which include RTG Management, will collectively subscribe for 15% of the
acquisition price, amounting to R84 million, being 56 000 000 Labat Shares at an issue price
of R1.50 cents. Mr Derick Reinhardt and RTG Management will retain this shareholding in
Labat for a minimum period of 18 months.

The balance of the subscription consideration of R201 million will be paid through issuing
134 000 000 new shares for cash in Labat at R1.50 cents by way of a Private Placement,
which will incorporate a Preferential Placing.

Labat also intends to issue a further 30 million shares to raise additional cash for expansion
capital.

Management and director appointments:
It has been agreed between the parties that as part of implementation of the transaction:

-    Mrs Rowena Majiedt will be appointed as non-executive chairperson of the RTG
     board;
-    Mr Derick Reinhardt will be appointed as non-executive deputy chairperson of the
     RTG board for at least 18 months;
-    Ms Happy Masondo will remain as a non-executive director of the RTG board
-    Mr Brian van Rooyen will be appointed as chief executive officer to the RTG board;
-    Mr Robert Axer will remain as the Chief operating Officer and
-    A new Deputy COO has been identified and is being appointed as an understudy to
     Robert Axer.

Conditions Precedent
The Transaction is still subject to shareholder and JSE approval. As previously announced,
Competition Commission approval has been received during September 2015.

Financial information
RTG has appointed JSE accredited auditors to perform an audit for the year ended 31 July
2015 in accordance with full International Financial Reporting Standards (“IFRS”). In addition,
the Annual Financial Statements for the years ended 31 July 2014 and 31 July 2013 were
previously audited in accordance with IFRS for SMME’s and have been restated in
accordance with full IFRS. This has resulted in amendments to previously published
information.

Extracts from the draft financial statements of RTG are accordingly set out below:

Extracts from the draft Statement of Profit or Loss and Other Comprehensive Income:
Figures in Rand                                          2015             2014             2013
Revenue                                         1 276 140 804    1 528 436 601    1 249 463 305
Operating profit                                  107 810 528      212 457 674       95 022 794
Investment revenue                                     50 020          692 341           48 458
Finance costs                                     (50 356 100)     (47 032 786)     (34 420 629)
Profit before taxation                             57 504 448      166 117 229       60 650 623
Taxation                                          (13 818 219)     (49 454 918)     (25 844 608)
Total comprehensive income for the year            43 686 229      116 662 311       34 806 015

The results for the year ended 31 July 2015 contain a once off provision for a large debtor in
the steel industry of R28 357 122 on a pre-tax basis. Any recovery of a portion of this amount
will be to the benefit of the enlarged Labat group.

Extracts from the draft Statement of Financial Position
Figures in Rand                                        2015               2014              2013
Retained income                                 343 597 742        388 638 563       253 274 053

The reduction in retained income is as a result of a dividend of R88 727 050 for the year
ended 31 July 2015.

Full details of the three year historical information of RTG will be included in the circular to
shareholders.

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 advised that the first submission of the circular, containing full details of the
transaction, has been submitted to the JSE.

The circular, incorporating a notice of General Meeting, will be posted in due course.

Labat will also make an application to the JSE to transfer its listing to the transport sector of
the Main Board following shareholder approval of the RTG Acquisition.

Post the Transaction; RGT will become a 100% 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.

BEE Status, Operational Issues and Profit Forecast:
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.

Labat’s level 1 BEE credentials will add additional potential to the RTG 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 credentials. The new BEE status is expected to further enhance and
expand existing client contracts.

Management is currently evaluating various service providers with a view in improving its
own BEE scorecard.

As a result of these initiatives, as well as some early successful contract awards, Labat will
also include a one year forecast for the year ending 31 August 2016 in the circular to
shareholders. The profit forecast will be published in due course as well as Revised Listing
Particulars.

Shareholders are reminded that Labat has changed its year end to 31 August each year in
anticipation of the RTG Acquisition being concluded and RTG will also change its year end
to 31 August each year.


Johannesburg
15 October 2015

Sponsor
Arbor Capital Sponsors Proprietary Limited

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