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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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