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BASIL READ HOLDINGS LIMITED - Disposal of 100% of issued share capital and sale claims of SprayPave (Pty) Ltd and the business of ARMAC

Release Date: 30/10/2015 08:10
Code(s): BSR     PDF:  
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Disposal of 100% of issued share capital and sale claims of SprayPave (Pty) Ltd and the business of ARMAC

Basil Read Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration Number 1984/007758/06)
Share Code: BSR ISIN: ZAE 000029781
(“Basil Read” or “the Company”)

DISPOSAL OF 100 PERCENT OF THE ISSUED SHARE CAPITAL AND SALE CLAIMS OF
SPRAYPAVE PROPRIETARY LIMITED (“SPRAYPAVE”) AND THE BUSINESS OF
AFRICAN ROAD MAINTENANCE AND CONSTRUCTION PROPRIETARY LIMITED
(“ARMAC”) (“THE TRANSACTION”)

1. INTRODUCTION

Shareholders are referred to the cautionary announcements, the last of which was
released on SENS on 29 September 2015, and are advised that Basil Read Limited
(a wholly owned subsidiary of Basil Read), and Much Asphalt Proprietary Limited
(registration number 2011/010666/07) (“Much Asphalt” or the “Purchaser”) have
entered into a sale of shares and claims agreement (the “Sale Agreement”), in terms
of which the Purchaser will acquire all of the issued share capital and claims against
SprayPave (registration number 1995/006372/07) from Basil Read Limited, and the
business of ARMAC (registration number 2000/004462/07) from ARMAC for a
maximum Purchase Consideration (“Transaction Purchase Consideration”) of
R78,643,000.00 (the “Transaction”).

2. RATIONALE FOR THE SALE AGREEMENT AND USE OF PROCEEDS

Basil Read Limited received an unsolicited approach from Much Asphalt to acquire
SprayPave and the business of ARMAC and following negotiations between the two
parties Basil Read Limited received an offer. The net proceeds from the Transaction
will be applied towards the reduction of debt and capital management initiatives.


3. BACKGROUND TO MUCH ASPHALT

Much Asphalt is a limited liability private company duly incorporated in South Africa
which operates in the asphalt industry where it manufactures and supplies a range of
hot and cold asphalt products to the road construction industry.


4. BACKGROUND TO SPRAYPAVE

SprayPave is a limited liability private company duly incorporated in South Africa and
manufactures and supplies bitumen, modified binders and emulsions for road
construction in South Africa. It has also acquired a bitumen reactor (“Plant”), from
Technix Industries Limited (“Technix”), (a limited liability private company registered
under the laws of New Zealand) which is in the process of being pre-commissioned in
New Zealand ahead of its ultimate commissioning in Cape Town.

5. BACKGROUND TO ARMAC

ARMAC, being a wholly owned subsidiary of Basil Read Limited, is a limited liability
private company duly incorporated in South Africa and owns immovable property in
Johannesburg, Cape Town and Durban from which SprayPave operates, as well as
certain plant and equipment which is leased by SprayPave.


6. KEY TERMS OF THE TRANSACTION

   6.1 Sale Agreement

   In terms of the Sale Agreement, the Purchaser will acquire the entire issued share
   capital of SprayPave (the “Sale Shares”) and all claims which Basil Read Limited
   has against SprayPave on the effective date of the Transaction (the “Sale
   Claims”), as well as certain equipment owned by Basil Read Limited and leased
   to SprayPave ("Basil Read Equipment").

   The Purchaser will acquire the Sale Shares for an amount of R9,119,023.20, and
   the business of ARMAC for an amount of R24,032,601.00 with the balance of the
   Purchase Consideration being allocated towards Sale Claims and the Basil Read
   Equipment. The maximum Transaction Purchase Consideration for the Sale
   Shares, the business of ARMAC, the Sale Claims and the Basil Read Equipment
   is R78,643,000.00 and will be settled in cash.

   The Transaction Purchase Consideration may decrease, due to certain
   adjustments that may be required once actual working capital and net debt
   balances have been confirmed. The Purchase Consideration may also be
   decreased if certain commissioning costs and milestone payments, in respect of
   the Plant, have not been made.

   The Transaction Purchase Consideration shall be paid by Much Asphalt out of
   immediately available cash.

   6.2 Other terms

   As a condition to the Sale Agreement, SprayPave and ARMAC shall conclude a
   sale of business Agreement where SprayPave will acquire the business of
   ARMAC ("ARMAC Sale Agreement") for a purchase consideration of
   R24,032,601.00 (“ARMAC Purchase Consideration”), which is included in the
   Transaction Purchase Consideration.

   SprayPave also owns 49% of the issued share capital of Mmila Project (Pty) Ltd
   (Registration Number 1998/018934/07) (“Mmila”), being a dormant construction
   related projects management company. As a condition to the Transaction,
   SprayPave will dispose of the shares in and claims against Mmila to Basil Read
   Limited, for a consideration of R1.00 (the “Mmila Sale Agreement”).

   Indemnities and warranties were provided by Basil Read Limited in the Sale
   Agreement which are normal for a transaction of this nature.

6.3 Conditions precedent

The Sale Agreement is subject to the fulfilment of the following conditions
precedent by no later than 23h59 on 31 January 2016.

a) the Purchaser’s representatives confirming in writing that the Plant is operative
   in New Zealand;

b) Basil Read Limited obtaining consent to the change of control from Technix,
   (the seller of the Plant under commissioning) and Nedbank Limited;

c) Basil Read Limited procuring the release, with effect from the effective date of
   the Sale Agreement, of (i) SprayPave from its obligations under certain cross
   guarantees and (ii) any encumbrances of the ARMAC assets pursuant to
   certain cross-guarantees given by ARMAC;

d) the conclusion of the ARMAC Sale Agreement and the fulfilment of the
   conditions therein;

e) the conclusion of the Mmila Sale Agreement and the fulfilment of the conditions
   therein and implementation of the Mmila Sale Agreement; and

f) the unconditional approval of the sale contemplated in the Sale Agreement by
   the Competition Commission or conditional approval on terms and conditions
   which the party which is or parties which are affected by such conditions or
   terms confirm acceptance in writing, within five business days of receipt of such
   conditional approval but in any event by no later than 31 January 2016.

6.4 Effective date of the Transaction

The effective date will be the first business day of the month following the month
in which the last of the conditions precedents is fulfilled or waived, as the case
may be.

7. PROFIT AND NET ASSET VALUE ATTRIBUTABLE TO SPRAYPAVE

     The value of the net assets of SprayPave as per the most recently published
     unaudited results of Basil Read, for the six months ended 30 June 2015 is R66.3
     million. The losses attributable to the net assets of SprayPave for the six months
     ended 30 June 2015 is R12.0 million;

     The value of the net assets of ARMAC as per the most recently published
     unaudited results of Basil Read, for the six months ended 30 June 2015 is R22.4
     million. The profits attributable to the net assets of ARMAC for the six months
     ended 30 June 2015 is R1.0 million.

     The value of the net assets of Mmila as per the most recently published unaudited
     results of Basil Read, for the six months ended 30 June 2015 is R0.4 million. The
     losses attributable to the net assets of Mmila for the six months ended 30 June
     2015 is Rnil.

     The Transaction Purchase Consideration is inclusive of the ARMAC Purchase
     Consideration.

8. CATEGORISATION OF THE TRANSACTION

     The Transaction constitutes a category 2 disposal for Basil Read under the
     provisions of section 9 of the Listings Requirements of the JSE Limited.

9.   WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

     Shareholders are advised that as the Sale Agreement has now been concluded
     there are no further negotiations ongoing and caution is no longer required to be
     exercised by shareholders when dealing in the Company’s securities.

Johannesburg
30 October 2015

A.T. Ndoni
Company Secretary

Corporate Advisor to Basil Read
St John Capital

Legal Advisor to Basil Read
Werksmans Attorneys

Legal Advisor to Much Asphalt
Edward Nathan Sonnenbergs Incorporated

Sponsor to Basil Read
Grindrod Bank Limited

Date: 30/10/2015 08:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
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