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Proposed disposal by Powertech of its automotive battery businesses to Trinitas
Allied Electronics Corporation Limited
(Registration number 1947/024583/06)
(Incorporated in the Republic of South Africa)
Share code: AEL ISIN: ZAE000191342
Share code: AEN ISIN: ZAE000191359
(“Altron” or “the Company”)
PROPOSED DISPOSAL BY POWER TECHNOLOGIES PROPRIETARY LIMITED
(“POWERTECH”) OF ITS AUTOMOTIVE BATTERY BUSINESSES (“POWERTECH BATTERY
GROUP”) TO TRINITAS FUND GENERAL PARTNER PROPRIETARY LIMITED (“TRINITAS”)
1. INTRODUCTION
Shareholders are advised that Powertech, a subsidiary of Allied Electronics Corporation Limited
(“Altron”) has entered into a binding offer (“the Offer”) with Trinitas, whereby Powertech Industries
will dispose of the Powertech Battery Group to Trinitas on terms and conditions more fully set out
in the Offer and as summarised below (“the Proposed Transaction”).
The salient terms and conditions of the Proposed Transaction are as follows:
- Trinitas has agreed to acquire the Powertech Battery Group incorporating the operating
assets and liabilities of all the Powertech Batteries divisions within Powertech including,
Powerbat (Namibia) (Pty) Ltd, Webroy (Pty) Ltd, Erf 2619 (Pty) Ltd and Erf 2620 (Pty) Ltd for
a total cash consideration of R300 million calculated on an enterprise value basis (debt and
cash free);
- the Offer includes all of the operating assets and liabilities relating to the Powertech Battery
Group (including inventory, trade and other debtors and trade and other creditors) and all
client and supplier / vendor information, contracts and tangible / intangible assets;
- the Proposed Transaction will exclude Powertech’s equity interest in the Enersys joint
venture, which pertains to batteries for industrial applications;
- standard warranties and indemnities associated with transactions of this nature will be
provided by Powertech;
- the Proposed Transaction will be subject to certain conditions precedent more fully set out in
this announcement; and
- Trinitas will invite certain key senior managers of the Powertech Battery Group to, among
others, sign service agreements following the effective date of the Proposed Transaction.
2. NATURE OF BUSINESS OF POWERTECH BATTERY GROUP
Powertech, via the Powertech Battery Group, manufactures and distributes a wide range of
automotive batteries for the South African market. This includes two well-known battery brands in
the automotive aftermarket sector namely Willard and Sabat Batteries. The Powertech Battery
Group’s comprehensive range of batteries extends to a wide variety of market sectors including;
passenger and heavy duty vehicles, agriculture, leisure and marine.
3. RATIONALE FOR THE PROPOSED TRANSACTION
Following strategic review sessions held at both Altron and Powertech during the past 12 months,
the Powertech board, in conjunction with the Altron board, has determined that the Powertech
Battery Group is no longer a core asset for the Altron Group and accordingly should be disposed of
to a third party who will be better suited to further develop this business going forward and to
extract value for shareholders.
4. EFFECTIVE DATE OF THE PROPOSED TRANSACTION
The Proposed Transaction will become effective following the fulfilment of the last of the conditions
precedent set out below and as detailed in the Offer.
5. CASH CONSIDERATION
The total cash consideration expected to be received by Powertech as a result of the Proposed
Transaction of the Powertech Battery Group to Trinitas is R300 million (“the Proposed Transaction
Consideration”).
The Proposed Transaction Consideration will be payable as to R160 million on the effective date of
the Proposed Transaction and R140 million which will be linked to and conditional upon actual
receipts of Automotive Production Development Programme income from the effective date.
6. NET ASSET VALUE OF AND PROFITS ATTRIBUTABLE TO THE POWERTECH
BATTERY GROUP AS PER ALTRON’S INTERIM RESULTS
The value of the net assets to be disposed of as at 31 August 2016 (being the date of the most
recent published financial results of the Altron Group) amounted to R301 million on a debt free,
cash free basis after adjusting for the agreed working capital levels.
For the six months ended 31 August 2016, the Powertech Battery Group generated revenue of
R481 million, EBITDA of R31 million and profit after tax of R24 million.
7. CONDITIONS PRECEDENT TO THE PROPOSED TRANSACTION
The Proposed Transaction is subject to the fulfilment or waiver (as the case may be) of, inter alia,
the following conditions precedent:-
- Trinitas declaring itself to be satisfied, in its reasonable discretion, with the results of a
confirmatory commercial, financial, legal and environmental due diligence investigation on or
before 15 December 2016;
- approval of the Proposed Transaction by all relevant regulatory bodies (including, but not
limited to the extent required in relation to the Proposed Transaction, the Competition
Commission and Tribunal, the Takeover Regulations Panel and any other applicable
regulatory body) by 28 February 2017;
- the reduction to writing and signature of all transaction documents required to record and
implement the Proposed Transaction and such documents becoming unconditional in
accordance with their terms by 28 February 2017;
- the Powertech Battery Group continuing to conduct business in the normal and ordinary
course of business and in a manner consistent with past practices for the period between
31 August 2016 and the effective date of the Proposed Transaction;
- there being no material adverse change in the financial performance and financial position of
the Powertech Battery Group for the period between 31 August 2016 and the effective date
of the Proposed Transaction; and
- the debt funding relating to the Proposed Transaction becoming unconditional on or before
28 February 2017.
8. APPLICATION OF THE PROPOSED TRANSACTION CONSIDERATION
The Proposed Transaction Consideration proceeds and cash realised will be used to reduce the
overall Altron Group debt.
9. CATEGORISATION OF THE PROPOSED TRANSACTION AND SHAREHOLDER
APPROVAL
The Proposed Transaction is classified as a Category 2 transaction in terms of Section 9.15 of the
JSE Listings Requirements and accordingly will not require Altron shareholder approval.
By order of the board of Altron
Johannesburg
1 November 2016
Financial Adviser and Sponsor
Investec Bank Limited
Date: 01/11/2016 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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