Wrap Text
Acquisition of the Assets and Operations of Belton Park Trading and Withdrawal of Cautionary Announcement
SACOIL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1993/000460/06)
JSE Share Code: SCL
ISIN: ZAE000127460
(“SacOil” or “the Company”)
ACQUISITION OF THE ASSETS AND OPERATIONS OF BELTON PARK TRADING AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
SACOIL STRENGTHENS ITS POSITION IN THE DOWNSTREAM PETROLEUM SECTOR BY
ACQUIRING A FUEL WHOLESALE AND DISTRIBUTION BUSINESS IN SOUTH AFRICA
Highlights
• SacOil to acquire the operations of Belton Park for maximum
consideration of R220 million, contingent on certain performance
parameters
• Belton Park is an independent fuel wholesaler and distributor,
distributing over 20 million litres of fuel products per month
• Significant fleet of 32 heavy duty tankers, that will complement
the Afric Oil fleet
• Complements SacOil’s recent acquisition of Afric Oil and increases
the current monthly fuel distribution volumes for the Group to
around 60 million litres
• The Acquisition is fully in line with the Company’s strategy to
expand its downstream business and strengthens SacOil’s position in
the fuel distribution market
• The Acquisition also provides SacOil with a stronger operational
footprint in South Africa thereby enabling the Company to play a
more meaningful role in the socioeconomic development of the
country.
SacOil, the South African based independent African oil and gas company
that is focussed on the full oil and gas value chain, is pleased to
announce that it has signed agreements to acquire the assets and
operations as well as to assume the liabilities of Belton Park Trading
134 Proprietary Limited (“Belton Park” or “Seller”) (the “Assets”) (the
“Acquisition”). Belton Park, an independent fuel wholesaler and
distributor with a substantial fleet of heavy duty tankers, distributing
over 20 million litres of fuel products (diesel, petrol, jet fuel,
paraffin and liquefied petroleum gas) monthly to a diversified
commercial and wholesale client base located across six provinces in
South Africa.
The purchase consideration for the Acquisition will be up to a maximum
of R220 million (“the Consideration”), split into an unconditional
initial cash consideration of R100 million (“the Initial Consideration”)
and a conditional consideration of up to R120 million (“the Contingent
Consideration”), conditional upon the Assets achieving performance
related targets for the financial year ending 28 February 2018 of a
minimum EBITDA of R45 million per annum. The Acquisition is subject to
the fulfilment of certain conditions precedent. Details of the
conditions precedent and settlement of the Consideration are set out
later in this announcement. SacOil intend to fund the cash component of
the Consideration from the proceeds of a rights issue to be undertaken
by the Company, also detailed below.
The Acquisition is fully in line with the Company’s stated strategy of
focussing on cash generating opportunities that expand and strengthen
SacOil’s operations across the oil and gas value chain on the African
continent. Following completion of the Acquisition, SacOil’s portfolio
will comprise of operated production activities in Egypt, exploration in
Democratic Republic of Congo, alongside partner TOTAL E&P RDC, a crude
trading allocation with Nigerian National Petroleum Company and fuel
distribution operations in Southern Africa that consist of the 71%
indirect interest in Afric Oil and Assets of Belton Park. The
Acquisition also provides SacOil with a stronger operational footprint
in South Africa thereby enabling the Company to play a more meaningful
role in the socioeconomic development of the country.
BACKGROUND TO BELTON PARK
Belton Park was established in 2012 and the co-founders are an integral
part of the senior management team that will continue to manage the
business under SacOil’s ownership. To date, the operations of Belton
Park have grown into a business distributing in excess of 20 million
litres of fuel products monthly with a reported unaudited turnover
attributable to the Acquisition for the financial year ended 28 February
2017 in excess of R2 billion. Belton Park currently operates in South
Africa only. The key customers of Belton Park include commercial,
industrial and non-refinery wholesale customers that procure fuel
products in bulk quantities.
The head office of Belton Park is located in Waterkloof, Pretoria and
the logistics operations are located in the East Rand of Johannesburg.
Belton Park currently has more than 70 employees who will move across to
the SacOil group as an integral part of the Acquisition.
SacOil has secured the commitment and services of the current senior
management team of Belton Park for a minimum period of two years. The
existing management team will continue to operate the Belton Park
business, which will be held in a newly incorporate wholly owned
subsidiary of SacOil.
RATIONALE FOR THE ACQUISITION
The Acquisition will provide SacOil with another income producing
subsidiary in South Africa and is in line with SacOil’s strategy to
become a significant, fully integrated pan-African industry player. The
Acquisition will provide SacOil with:
- A well-established business that operates in a regulated, fixed
margin fuel distribution sector in South Africa;
- A respected player and brand in the South African wholesale fuel
distribution market;
- Access to a substantial fleet of heavy duty tankers;
- Access to significant revenue generation and predictable, low-risk
income;
- An experienced and stable management team, with in-depth industry
knowledge and market relationships; and
- Further diversification of SacOil’s upstream and midstream
portfolio to include logistics, fuel wholesale distribution, crude
trading, exploration and production.
Commenting on the Acquisition Dr Thabo Kgogo, CEO of SacOil, said:
“This acquisition of the business of Belton Park is in line with our
strategic objectives to strengthen our existing platform in the
downstream wholesale distribution market and further diversify our
predictable revenue streams.
The Acquisition will increase SacOil’s consolidated revenues
significantly, enhancing those already generated from our production in
Egypt, our existing crude trading business in Nigeria and our majority
interest in Afric Oil. . We see significant opportunities to grow within
the wholesale distribution market in South Africa and expect to benefit
from cost savings as we leverage synergies from our expanding operations
in this market. Furthermore, as a South African based business, we are
pleased to strengthen our operational footprint within the country and
position ourselves to deliver greater value to all stakeholders.”
PRESENTATION AND ADDITIONAL DETAILS
The Group’s AGM presentation provides further details on the Acquisition
and will be available on SacOil’s website at 10am this morning:
www.sacoilholdings.com
CONDITIONS PRECEDENT TO THE ACQUISITION
The Acquisition is conditional upon, inter alia, the fulfilment of the
following outstanding conditions precedent:
i. Written approval for the implementation of the Acquisition has
been duly obtained from the Competition Authorities, either on an
unconditional basis or subject to conditions as are satisfactory
to SacOil;
ii. The South African Takeover Regulation Panel has issued a
compliance certificate or has granted an exemption certificate as
contemplated in section 121(b) of the Companies Act in regard to
the implementation of the Acquisition;
iii. To the extent legally required, the Seller and the Purchaser
shall deliver a special resolution of their shareholders in terms
of section 112 read with section 115 of the Companies Act
authorising to implement the Acquisition;
iv. The Purchaser shall have notified the Seller in writing that
there has been no Material Adverse Change between the Signature
Date and the day immediately following the date upon which the
last of the Conditions Precedent has been fulfilled or waived;
v. The Purchaser shall have applied for a wholesale licence to the
Department of Energy;
vi. The Purchaser has executed independent contractor service
agreements with each of the owners of Belton Park on terms and
conditions and in form and substance acceptable to the Purchaser;
vii. The Purchaser has successfully implemented a rights offer to its
shareholders by 31 December 2017 that would be sufficient to meet
the cash component of the Purchase Consideration;
viii. Written approval for the implementation of the Acquisition has
been duly obtained from the Purchaser’s Lender, to the extent
legally required; and
ix. The Seller’s principals shall have been released from all
personal guarantees and suretyships provided by the principals in
relation to the Seller.
ACQUISITION DETAILS AND SETTLEMENT OF THE CONSIDERATION
The Consideration for the Acquisition will be settled in cash and SacOil
shares, as set out below.
The Initial Consideration of R100 million will be settled by SacOil, in
cash, five business days after the month end in which all conditions
precedent have been fulfilled (“Closing Date”). The cash component of
the Contingent Consideration of R90 million will be placed in a Trust
Account on the Closing Date and payable to the
Sellers, including the interest accrued, subject to the terms below.
The Contingent Consideration of up to R120 million will be discharged by
SacOil as follows:
1. within 10 days after the audited results being issued for the
Belton Park business for the year ending 28 February 2018, a
cash payment of R90 million shall be payable to the Sellers; and
2. non-cash payment of up to R30 million shall be payable by
issuing ordinary SacOil shares at a 10% discount to the 30 day
VWAP calculated at the Closing Date, to the Seller by 1 June
2018.
The cash component of the Contingent Consideration of R90 million is
conditional on the Belton Park business achieving a minimum annualised
consolidated EBITDA of R45 million for the financial year ending 28
February 2018. Should the Belton Park business achieve EBITDA between
R27 million and R45 million, then EBITDA cash component of the
Contingent Consideration will reduce on a pro rata basis of R4.80 for
each rand that is below the R45 million, subject to a 10% variance being
acceptable for the EBITDA deviation from R45 million to account for
certain external factors, and the R27 million EBITDA minimum.
EFFECTIVE DATE
Completion of the Acquisition is subject the fulfilment of the
conditions precedent disclosed above and is anticipated to occur by no
later than 31 December 2017.
THE VALUE OF THE NET ASSETS BEING ACQUIRED AND ATTRIBUTABLE PROFITS
As at the signature date of the Acquisition agreements, for the 12
months ended 28 February 2017, Belton Park unaudited consolidated
earnings before interest, tax, depreciation and amortisation was R27
million, profit after tax was R5 million. The net asset value of the
assets being acquired is R7 million.
CATEGORISATION
The Acquisition is classified as a Category 2 transaction for SacOil in
terms of the Listings Requirements of the JSE Limited (“Listings
Requirements”).
Following the implementation of the Acquisition, the Assets will be held
by a newly incorporated subsidiary of SacOil. SacOil confirms that the
new subsidiary’s constitutional documents will enable SacOil to continue
to comply with its obligations in terms of the Listings Requirements.
SACOIL’S SETTLEMENT OF THE CONSIDERATION
SacOil intends to fund the Acquisition by:
- The Initial Consideration of R100 million cash payable on the
Closing Date will be funded from the proceeds of a rights issue to
be undertaken by SacOil, with details set out below; and
- The Contingent Consideration of up to R90m cash payable circa 31
May 2018 will be funded from the proceeds of a rights issue to be
undertaken by SacOil, with details set out below.
- The Contingent Consideration of up to R30m non-cash payable circa
31 May 2018 will be settled by issuing SacOil ordinary shares to
Belton Park priced at a 10% discount to the 30 day VWAP calculated
at the Closing Date.
It is intended that, there would be a capital raise within the next 3
months after the date of this announcement, which will be implemented by
way of the allotment and issue of SacOil ordinary shares pursuant to a
rights issue to redeem the equity bridge, $12.5 million secured in 31
May 2017, settle the cash consideration for this Acquisition and raise
any additional equity for expansion of the SacOil enlarged group. In
anticipation thereof, SacOil will seek to obtain the binding
undertakings from key shareholders to support the rights issue.
INTEGRATION STRATEGY
After the completion of the Acquisition, the Belton Park business will
be held by a newly incorporated subsidiary of SacOil. SacOil will engage
the existing minority shareholders, the Board of Directors and the
management teams of Belton Park and Afric Oil to develop and execute a
collaborative growth strategy.
The key focus area for SacOil will be on ensuring that the relevant
synergies from the Belton Park Assets are achieved in terms of possible
cost savings, enhanced margins and the identification of new growth
opportunities that will enhance SacOil’s market position.
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Following the release of this announcement, the cautionary announcement
originally published by SacOil on 27 July 2017, and renewed on 7
September 2017, is hereby withdrawn and caution is no longer required to
be exercised by shareholders of SacOil when dealing in SacOil shares.
JSE Sponsor
PSG Capital Proprietary Limited
2 October 2017
For further information please contact:
SacOil Holdings Limited
Damain Matroos
+27 (0)10 591 2260
Buchanan (Financial PR adviser)
Ben Romney / Chris Judd
+44 (0)20 7466 5000
Corporate Advisor to Belton Park
Gem Capital (Pty) Ltd
+27 (0)11 684 1701
ABOUT SACOIL
SacOil is a South African based independent African oil and gas company,
listed on the JSE. The Company has a diverse portfolio of assets
spanning production in Egypt; exploration and appraisal in the
Democratic Republic of Congo; midstream project relating to crude
trading in Nigeria and a majority interest in AfricOil, the petroleum
product wholesaler. Our focus as a Group is on delivering energy for the
African continent by using Africa’s own resources to meet the
significant growth in demand expected over the next decade. The Company
continues to evaluate industry opportunities throughout Africa as it
seeks to establish itself as a leading, full-cycle pan-African oil and
gas company.
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