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STADIO HOLDINGS LIMITED - Acquisition Of Milpark Education Proprietary Limited

Release Date: 13/10/2017 09:00
Code(s): SDO     PDF:  
Wrap Text
Acquisition Of Milpark Education Proprietary Limited

STADIO HOLDINGS LIMITED
(Previously Embury Holdings Proprietary Limited)
(Incorporated in the Republic of South Africa)
Registration number: 2016/371398/06
JSE share code: SDO
ISIN ZAE000248662
(“STADIO”)

ACQUISITION OF MILPARK EDUCATION PROPRIETARY LIMITED

1.   THE ACQUISITION

     Shareholders are hereby advised that STADIO and Brimstone
     Investment Corporation Limited (“Brimstone”), acting through
     a newly incorporated private company, Milpark Investments
     SPV Proprietary Limited (“Milpark SPV”), in which STADIO
     will have an effective interest of 70% and Brimstone, at
     acquisition, will have an effective interest of 30% (as at
     the date of the acquisition), have entered into an agreement
     (“Agreement”) with Coöperative Apollo Global Netherlands
     U.A. (“Apollo”), Encosolve Proprietary Limited (“Encosolve”)
     (collectively, the “Sellers”) and MBS Education Investments
     Proprietary Limited (“MBS Education”) dated 12 October 2017
     (“Signature Date”), in terms of which, if successfully
     implemented, Milpark SPV will acquire 100% of the issued
     share capital of MBS Education , which is the investment
     holding company that holds 100% of the issued shares of
     Milpark Education Proprietary Limited (“Milpark”), on the
     terms and conditions more specifically set out in the
     Agreement (“Acquisition”).

2.   RATIONALE FOR THE ACQUISITION

     As set out in its pre-listing statement, STADIO intends to
     acquire several additional programmes (including degrees,
     higher certificates and diplomas) in order to expand its
     offering to students, which include school leavers and
     working adults, through both contact and distance learning
     modes of delivery.

     The acquisition of Milpark provides STADIO with a wide
     variety of additional qualifications in the business and
     commerce faculty and will assist STADIO in widening access
     to higher education in South Africa.

3.   THE BUSINESS OF MILPARK

     Milpark was established in 1997, being one of the first
     private providers of higher management education in South
     Africa. Today, it remains a leading provider of Higher
     Education and Further Education and Training qualifications.
     Milpark is registered with the South African Department of
     Higher Education and Training as a Private Higher Education
     Institution (No 2007/HE07/003). Milpark currently has 18 key
     accredited higher education programmes, is accredited to
     offer tuition towards 15 further education and training
     (“FET”) qualifications and 18 registered learnerships. With
     a national footprint in South Africa, Milpark has two
     teaching campuses situated in Cape Town and Johannesburg,
     and a support office in Durban. The majority of Milpark’s
     programmes are offered through the distance learning mode
     of delivery. Milpark currently has approximately 17 000
     students registered for its various programmes.

     Milpark’s flagship qualification, its Master of Business
     Administration degree (“MBA”), has been ranked number 1
     amongst private providers of the MBA in South Africa by
     PMR.africa for three consecutive years, from 2015 to 2017.

     Milpark will seek to grow its business by focussing on
     targeting the school leaver market in both contact and
     distance learning modes of delivery, as well as scaling its
     new distance learning online offering across a wider range
     of programmes.

4.   EFFECTIVE DATE

     The effective date of the Acquisition shall be the fifth
     business day after the day on which the last suspensive
     condition is fulfilled or, where applicable, waived
     (“Effective Date”), which is expected to occur during
     February 2018 or shortly thereafter.

5.   PURCHASE CONSIDERATION

     The aggregate purchase consideration payable by Milpark SPV
     in terms of the Acquisition will be R320 000 000, subject
     to standard non-material closing date adjustments. The
     purchase consideration will be settled in cash by
     Milpark SPV by way of electronic funds transfer.

6.   SUSPENSIVE CONDITIONS

     The Acquisition is subject to the following suspensive
     conditions, that:

6.1.   all of the necessary board and shareholder resolutions are
       passed   by   the   relevant    parties,   approving   the
       implementation of the transactions contemplated in the
       Agreement;
6.2.   each of the shareholders of Milpark SPV provides a written
       guarantee for the punctual performance of its obligations
       in terms of the Agreement;

6.3.   Apollo, Milpark and MBS Education have concluded an IT
       services agreement on terms and conditions acceptable to
       Milpark SPV;

6.4.   an internal funding/debt restructuring of MBS Education
       is implemented and all board and shareholder resolutions
       required to implement the restructuring are passed by the
       Sellers and their related parties; and

6.5.   the consent of the counterparties required pursuant to
       certain agreements entered into by Milpark, have been
       obtained and the relevant regulatory approvals are
       obtained, including Competition Commission and Exchange
       Control approval.

7.   FINANCIAL INFORMATION

     In terms of the latest audited annual financial statements
     of MBS Education, for the financial year ended
     28 February 2017, the net asset value of MBS Education
     amounted to R283 228 265, while the attributable loss after
     taxation amounted to R1 794 429 for the 12 months ended
     28 February 2017.

     In terms of the latest audited annual financial statements
     of Milpark, for the financial year ended 31 August 2016, the
     net asset value of Milpark amounted to R64 737 075, while
     the attributable profit after taxation of Milpark amounted
     to R13 188 279 for the 12 months ended 31 August 2016.

     As a point of reference and after adjusting for specific
     non-recurring charges by Apollo, Milpark reflected an
     adjusted EBITDA of R33 642 609 for the 12 months ended
     31 August 2016.

     The financial information contained in this announcement has
     not been reviewed or reported on by STADIO’s auditors.

8.   OTHER SIGNIFICANT TERMS OF THE AGREEMENT

     In terms of the Agreement, the Sellers have provided such
     warranties and indemnities to Milpark SPV which are standard
     for a transaction of this nature.
9.   CATEGORISATION

     The Acquisition qualifies as a category 2 transaction for
     STADIO in terms of the JSE Listings Requirements.

Durbanville
13 October 2017

Transaction Advisor and Sponsor:
PSG Capital Proprietary Limited

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